NZD/USD Fell To Around 0.5950 Ahead Of The Fed’s Interest Rate Decision On Wednesday

NZD/USD gave up recent gains and was trading around 0.5950 during the Asian session on Tuesday. NZD/USD was weakened by a rebound in the U.S. dollar, likely due to hawkish comments from officials at the U.S. Federal Reserve (Fed), suggesting that an immediate interest rate cut was not necessary.

Federal Reserve Chairman Jerome Powell said it may take “longer than expected” to be confident that inflation is heading towards the central bank’s 2% target, the Economic Times reported on Monday. Additionally, Federal Reserve Governor Michelle Bowman expressed her concerns about “upside risks” to inflation. Meanwhile, Minneapolis Fed President Neel Kashkari raised the possibility of no interest rate cuts this year.

As of press time, the U.S. dollar index (DXY), which measures the U.S. dollar’s performance against six major currencies, was trading higher at around 105.80. Traders are expected to focus on Wednesday’s U.S. (US) ADP employment changes and ISM manufacturing purchasing managers’ index, as well as the Federal Reserve’s interest rate decision. These events may affect market sentiment and U.S. dollar trends.

In New Zealand, the ANZ business confidence index fell to 14.9 in April from 22.9 in March, falling for the third consecutive month and hitting its lowest level since September last year. The latest data shows that New Zealand’s economy is clearly weakening, which is likely to be affected by the Reserve Bank of New Zealand’s (RBNZ) decision to raise interest rates.

Additionally, growing optimism over peace talks between Israel and Hamas in Cairo, amid dwindling concerns over a potential conflict between Israel and Iran, has bolstered investor appetite for riskier currencies such as NZD/USD. This sentiment may limit NZD/USD losses.

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