The NZDUSD has climbed to new highs after a US CPI report was released. The US dollar is under more pressure as the data matched forecasts, causing markets to anticipate an interest rate cut in September. The chance of an easing has risen to 60 basis points by the end of the year, up from 57 basis points before the CPI report. Market confidence for a September cut is increasing, with expectations for at least one more cut by year-end. However, a strong NFP report in September could change these expectations. Additionally, August features Fed Chair Powell’s speech at Jackson Hole, which may also impact market views.

NZD Overview

The NZD is holding steady, with no major data changes except for a labor market report in line with expectations. Markets are forecasting a 42 basis point easing by year-end, with a 94% chance of a cut in the next meeting. On the daily chart, NZDUSD gains have paused near a trendline at 0.60. A rally might encourage sellers, who could target a drop to the 0.5850 support level. On the 4-hour chart, an upward trendline shows bullish momentum, with buyers preparing for a rally and sellers eyeing a drop. The 1-hour chart indicates resistance at 0.5965, where sellers aim for a downward move and buyers seek a rally. Upcoming US data includes PPI, Jobless Claims, Retail Sales, and Consumer Sentiment reports. The date today is 2025-08-14T08:59:47.786Z.

Fed Interest Rate Expectations

The US dollar is weakening as we expect the Federal Reserve to cut interest rates soon. The recent Consumer Price Index report from July 2025 showed inflation at 3.1%, indicating that inflation is cooling, which supports this expectation. This has pushed the NZDUSD pair higher, though it is now facing some resistance. Markets are pricing in a 90% chance of a rate cut at the Fed’s September meeting, with futures suggesting 60 basis points of cuts by year-end. This follows a jobs report that showed only 170,000 jobs were added in July 2025, which gives the Fed more room to ease policy. Attention is now on Fed Chair Powell’s upcoming speech at the Jackson Hole symposium for any changes in tone. However, the New Zealand dollar has its own challenges, as the Reserve Bank of New Zealand is also expected to cut rates. With the RBNZ’s Official Cash Rate at 5.50%, markets expect nearly two full rate cuts by the end of the year. This dovish outlook from both central banks is capping the currency pair. Given the resistance near the 0.6000 level, traders might consider buying NZDUSD call options with strike prices just above this key trendline. This strategy allows for limited risk while aiming to profit from a potential breakout if tomorrow’s US data, such as Retail Sales, is weaker than expected. It also limits possible losses if the resistance holds firm and the price moves lower. On the other hand, since the Jackson Hole event carries significant risk, it’s wise to hedge against a downturn. Buying put options with a strike price below the current upward trendline—perhaps around 0.5900—can protect existing long positions. This serves as insurance against a potentially hawkish message from Powell, which could strengthen the dollar and push the NZDUSD lower. With significant events approaching, implied volatility is likely to rise. A long straddle strategy, which involves buying both a call and a put option at the same strike price, could help traders profit from large price swings in either direction. This approach is ideal for traders who expect a major market-moving announcement but are uncertain about which way the market will go. Create your live VT Markets account and start trading now.

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