New Zealand Dollar struggles to gain traction as cautious RBNZ outlook weighs
NZD/USD trades around 0.5880 on Monday at the time of writing, posting a modest 0.06% decline on the day after two consecutive days of gains.
The New Zealand Dollar (NZD) has been struggling to gain momentum as investors are cautious about the Reserve Bank of New Zealand (RBNZ)'s monetary policy outlook. Despite a second consecutive interest rate hike by the RBNZ, there is a lack of enthusiasm to anticipate a more aggressive tightening cycle. The Greenback (USD) remains hesitant, and investors are focusing on upcoming US inflation data, which could shape expectations surrounding the Federal Reserve's (Fed) future policy decisions.
Although the latest US employment data was stronger than expected, the Fed's stance on interest rates is still contingent on inflation developments. Goldman Sachs expects a benign Consumer Price Index (CPI) reading to prevent further rate hikes, even after the solid labor market performance in August. Upcoming US inflation data will be a crucial catalyst for the NZD/USD exchange rate.
The NZD/USD pair is currently hovering near 0.5878, with a neutral near-term bias. The pair is bounded by the rising trendline support at 0.5876 and the 100-period simple moving average (SMA) around 0.5872, while being capped by the descending trendline resistance near 0.5884.
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