USD Strengthens Slightly as Traders Await Key Economic Data

The United States Dollar (USD) showed slight strength on Friday, bolstered by positive comments from former President Donald Trump regarding trade relations with China. This upward movement occurred as Treasury yields recovered from losses incurred the previous day. The performance of the USD has been mixed recently, influenced by rapid shifts in risk sentiment following Trump’s threats of tariffs.

Domestically, the ongoing government shutdown has delayed the release of several key economic reports, which adds uncertainty to the market. A critical focus for traders is the upcoming Consumer Price Index (CPI) report due from the Bureau of Labor Statistics on Friday, despite the shutdown. Strong data from this report is crucial for the “dollar repricing trade,” particularly concerning the labor market. If the data fails to meet expectations, it could weigh heavily on the USD, especially if concerns about economic growth arise.

New Zealand Dollar Faces Pressure Amid RBNZ Cuts

In New Zealand, the Reserve Bank of New Zealand (RBNZ) recently cut the official cash rate by 50 basis points, bringing it to 2.5%, the lower boundary of its neutral range of 2.5% to 3.5%. Despite this move, the RBNZ maintains an easing bias, as noted by Governor Adrian Orr, indicating a cautious approach to monetary policy. The Q3 inflation report released on Sunday aligned with market expectations, contributing to a prevailing sentiment of a 99% probability for another cut in November.

Technical analysis of the NZD/USD currency pair illustrates a range-bound trading pattern. The pair broke above a downward trendline but has struggled to surpass the 0.5760 resistance zone. Currently, it is consolidating just below this resistance level, with traders awaiting fresh catalysts to determine the next market direction.

On the four-hour chart, price action is confined between the 0.5760 resistance and 0.5710 support, indicating a potential trading range where participants may buy at support and sell at resistance. The one-hour chart suggests that buyers are likely to step in near the support level, while sellers may look for a break below to enhance bearish positions.

Overall, market participants will keep a close eye on developments in US-China relations, as well as the forthcoming US CPI report and flash Purchasing Managers’ Index (PMI) data. These factors will likely serve as significant drivers for both the USD and NZD in the near term, influencing trader sentiment and market direction.