NZD/USD retreats from highs, steadies above 0.6100
- NZD/USD rises on broad-based USD weakness on Tuesday.
- Greenback struggles to find demand, US Dollar Index drops below 100.
- RBNZ is expected to keep its policy rate unchanged at 0.25%.
After staying relatively quiet near 0.6050 during the Asian session, the NZD/USD pair capitalized on the broad-based USD weakness and climbed to a daily high of 0.6123. Although the pair struggled to preserve its bullish momentum at the start of the American session amid falling US stocks, it continues to trade a little above 0.6100, gaining 0.4% on the day.
Earlier in the day, the upbeat market mood helped the risk-sensitive kiwi find demand and caused the USD to lose interest. The US Dollar Index, which rose sharply on Monday, broke below 100 and was last seen down 0.5% on the day at 99.73.
The only data from the US showed that the annual core Consumer Price Index in April fell to 1.4% from 1.7% but had little to no impact on the USD's valuation.
Meanwhile, FOMC members Kaplan and Kashkari voiced their opposition against negative interest rates but failed to help the greenback erase its losses.
Attention shifts to RBNZ
On Wednesday, the Reserve Bank of New Zealand (RBNZ) will release its monetary policy statement and announce the policy rate decision. Markets expect the RBNZ to keep its policy rate unchanged at 0.25%.
Commenting on the possible market reaction to this event, "we do see some risk that the NZD will spike higher if the RBNZ maintains their earlier guidance that the OCR will remain at 0.25% for at least the next 12 months," said ANZ analysts. "However, we’d characterise that as a knee-jerk reaction that would likely prove short-lived."
Technical levels to watch for