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EUR/USD Approaches 1.1800 as Fed Cut Chances Increase and French Political Uncertainty Dampens Eurozone

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  • September 9, 2025
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EUR/USD rose towards 1.1800 during Tuesday’s Asian session, its third straight day of advances, as the US Dollar dipped on hopes of a September Federal Reserve interest rate cut. Bets in the market are for a virtual 90% likelihood of a 25-basis-point cut with only a 10% chance of a bigger 50-basis-point reduction based on softer US employment data. Eyes now switch to pivotal US inflation reports, such as PPI and CPI, that may inform the Fed’s policy direction. Meanwhile, political tension in France following a confidence vote loss by Prime Minister François Bayrou puts pressure within the Eurozone, while most traders expect the European Central Bank to keep rates unchanged this week. KEY LOOKOUTS • Markets price in almost 90% probability of a 25 bps September reduction with 10% probability of an increased 50 bps adjustment. • PPI and CPI releases this week will play a crucial role in informing the Fed’s rate outlook. • Prime Minister François Bayrou’s confidence vote failure introduces new uncertainty in the Eurozone. • Market expects rates to be left on hold by the ECB but attention will be focused on guidance regarding future policy. EUR/USD maintained its strength on Tuesday, closing around 1.1780 as investors wait for the Federal Reserve’s decision in September, with markets heavily biased in favor of a 25-basis-point rate cut and even looking at a bigger move of 50 bps. The weakness in the US Dollar, driven by weaker jobs data, has helped the pair, and coming US inflation numbers, such as PPI and CPI, will look to guide the currency further. On the European front, the Euro came under political pressure as French Prime Minister François Bayrou lost a confidence vote, creating new uncertainty, although the ECB is universally anticipated to maintain rates unchanged in its next meeting. EUR/USD hovers around 1.1780 as bets for the Fed rate cut hammer the US Dollar, with markets looking for crucial US inflation numbers this week. Eurozone uncertainty is built in due to political instability in France, while the ECB is likely to maintain rates unchanged on Thursday. • EUR/USD posts third consecutive gain, hovering around 1.1780. • US Dollar loses ground as markets become more convinced of a September Fed rate cut. • CME FedWatch instrument indicates 90% probability of a 25 bps cut, with 10% probability of a 50 bps move. • Weaker US jobs data has lifted Fed easing expectations. • Traders look to US PPI on Wednesday and CPI on Thursday for policy signals. • French Prime Minister François Bayrou loses confidence vote, following political uncertainty. • ECB likely to leave rates steady, with attention to its forward guidance. The Euro is attracting support this week on the basis of expectations by traders for key policy and political developments on both sides of the Atlantic. In the U.S., the Federal Reserve meeting in September is the focus, where markets overwhelmingly expect an interest rate reduction on account of recent indications of weaker labor market performance. Investors are also preparing for a series of key inflation reports, such as the Producer Price Index and Consumer Price Index, that may provide new information on the Fed’s future action. EUR/USD DAILY CHART PRICE SOURCE: TradingView In Europe, markets are concerned with monetary policy and political unrest. The European Central Bank is expected to stand pat on rates at its next meeting, with traders watching its forecast for the remainder of the year closely. Meanwhile, France has moved into a state of uncertainty following the loss of a confidence vote by Prime Minister François Bayrou, which compelled President Emmanuel Macron to find a new chief. This combination of changing US policy expectations and Eurozone political uncertainty is directing the overall sentiment toward the Euro. TECHNICAL ANALYSIS EUR/USD is holding strong around the 1.1780 level, continuing its recent upward trend as buyers are in charge. The currency pair has stretched its winning sequence for the third consecutive session, with support at present in the 1.1750 area, and the next major resistance level prevailing around the psychological 1.1800 level. A decisive crossing above the same could pave the way towards higher gains, while a lack of momentum may ignite a sell-off towards near-term levels of support. FORECAST Should optimistic momentum prevail, EUR/USD may see through the psychological 1.1800 level, with the next resistance at 1.1850 being in focus for buyers. More optimistic Euro sentiment can be boosted if the Federal Reserve indicates an increased determination towards loosening or if US inflation numbers are softer than anticipated, boosting confidence in further cuts in interest rates. Conversely, inability to hold above 1.1780 levels may cause EUR/USD to drop back to the 1.1750 support zone, with further falls possible towards 1.1700 depending on market sentiment shifting towards the US Dollar. Reversals in US economic news or dovish cues from the ECB might put pressure on the pair and cap additional upside gains.

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Currencies EUR/USD

EUR/USD Steadies as Traders Wait for US Jobs Data and Services PMI for Fed Policy Hints

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  • September 4, 2025
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EUR/USD is trading in a narrow range around 1.1650 as investors are cautious ahead of key US economic data, including the ADP Employment Change and ISM Services PMI, with Friday’s Nonfarm Payrolls as the primary driver for Fed policy expectations. Weaker Eurozone retail sales and soft US JOLTS job openings have fueled speculation of a September Federal Reserve rate cut, now priced at almost 97%. Traders, however, are reluctant to take large positions, fearing upside surprises in future labor market reports, leaving the Euro exposed within its established range of support at 1.1585–1.1610 and resistance around 1.1680–1.1735. KEY LOOKOUTS • The ADP Employment Change and Friday’s Nonfarm Payrolls will be pivotal in determining expectations for a September Fed rate cut. • Disappointing July retail sales reflect sluggish consumption, weighing on Euro sentiment. • Market expectations of a September rate cut jumped to 97%, with additional cuts possible in the coming months. • Support is at 1.1610–1.1590, while resistance is at 1.1680–1.1735, keeping EUR/USD stuck within its recent range. The EUR/USD pair is trading steady around 1.1650 as investors are cautious ahead of the US ADP Employment Change and ISM Services PMI, with Friday’s Nonfarm Payrolls set to be the primary driver for near-term direction. Weak Eurozone retail sales data put pressure on the Euro, while soft US labor market signals and dovish Fed comments have boosted expectations of a September rate cut. Despite easing debt concerns and falling bond yields, traders are reluctant to take large bets until more clarity is provided by upcoming US data, leaving the pair fluctuating within its recent support and resistance levels. EUR/USD trades flat around 1.1650 as markets wait for US jobs and services data for Fed policy hints. Weaker Eurozone retail sales and softer US labor signals keep the pair range-bound, with traders cautious ahead of Friday’s Nonfarm Payrolls. • EUR/USD trades around 1.1650 ahead of the US session, without clear direction. •  Eurozone retail sales declined 0.5% in July, deeper than anticipated, weighing on the Euro. • US JOLTS job openings fell to their lowest in almost a year, indicating labor market weakness. • Fed rate cut expectations jumped to 97% for September, driven by weak economic data and dovish Fed rhetoric. • ADP Employment Change forecast at 65K, down from July’s 104K, raising job creation concerns. • ISM Services PMI forecast at 51.0, indicating modest improvement in US service sector activity. • Technical range continues with support at 1.1585–1.1610 and resistance around 1.1680–1.1735. The Euro is finding it difficult to gain traction as investors continue to focus on upcoming US economic data releases that are likely to offer clearer signals on Federal Reserve policy. A sharper-than-anticipated fall in Eurozone retail sales has weighed on sentiment, with weak consumer demand across the region. Meanwhile, softer US labor market signals, including a fall in job openings to the lowest level in almost a year, have supported expectations of Fed easing. Market participants are closely monitoring the ADP Employment Change and ISM Services PMI data, while Friday’s Nonfarm Payrolls report is expected to be the most influential event for the week. EUR/USD DAILY CHART PRICE SOURCE: TradingView Broader market sentiment has stabilized following recent worries about global debt levels, with easing bond yields offering some comfort to investors. Fed officials have signaled the possibility of rate cuts beginning as early as September, which has supported bets on a more accommodative stance in the coming months. However, traders are still cautious, shying away from large positions until there is more clarity from the US jobs data. Against this backdrop, EUR/USD is likely to remain stable, with investor attention firmly on economic releases that could redefine expectations for monetary policy in the US and Europe. TECHNICAL ANALYSIS EUR/USD continues to be contained within a well-defined range, without a decisive breakout. Immediate support is at 1.1610, with a firmer floor between 1.1575 and 1.1590, an area that has consistently stopped bearish advances in recent weeks. A deeper fall could test the 50% Fibonacci retracement level around 1.1565, followed by the August low around 1.1530. On the upside, resistance is lined up at 1.1682, with further hurdles at the descending trendline around 1.1725 and the 1.1735 zone, which capped gains several times in August and early September. Until a clear move above these levels is made, the pair is likely to continue consolidating within its established limits. FORECAST If US labor data in the coming days confirms a sharper slowdown in employment, EUR/USD could gain traction as markets fully price in a September Fed rate cut. Softer-than-anticipated ADP or Nonfarm Payrolls reports would weaken the Dollar, paving the way for a recovery towards 1.1680 initially. A sustained break above this level could encourage further bullish momentum towards the descending trendline around 1.1725–1.1735, where firmer resistance lies. Alternatively, a stronger-than-anticipated US jobs report could dampen rate-cut expectations, strengthening the Dollar and putting pressure on the Euro. In that event, EUR/USD may slide towards the 1.1610 area, with a break below exposing the key support zone at 1.1575–1.1590. If selling gathers pace, further downside could target the 50% Fibonacci retracement at 1.1565 and eventually the August low around 1.1530.

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Currencies USD/JPY

Japanese Yen Flat as BoJ Hawkishness Confronts Fed Rate Cut Projections

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  • August 5, 2025
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Japanese Yen remained unchanged against the US Dollar on Tuesday, while hawkish indications from the Bank of Japan and a higher revision in Japan’s Services PMI offered foundational support for the currency. Nevertheless, political uncertainties within Japan and a generally optimistic market mood muted safe-haven demand for the Yen. In the meantime, the US Dollar struggled to push gains as expectations of a September Fed rate cut increased, particularly after softer US job data and political pressure on the Federal Reserve. The USD/JPY pair floated above the 147.00 level, with investors looking to the upcoming US ISM Services PMI and FOMC comments for new direction. KEY LOOKOUTS • June BoJ meeting minutes reiterated the potential for a year-end rate hike, keeping the JPY bears on their toes. • More than 80% chance of a September Fed rate cut continues to pressure the US Dollar. • The recent election defeat of the ruling party has raised some concerns about fiscal policy, potentially hampering BoJ tightening. • The attention of the market now turns to the US ISM Services PMI and comments from Federal Reserve officials for short-term USD/JPY direction. The Japanese Yen continued to trade range-bound versus the US Dollar on Tuesday, as market participants weighed hawkish cues from the Bank of Japan with increasing bets on a September rate cut by the Federal Reserve. Though optimistic domestic data and BoJ’s renewed pledge to policy tightening provided support to the Yen, fears about Japan’s political situation and rising global risk appetite capped its upside. Conversely, the US Dollar received modest support from bond yields but failed to achieve significant traction with softer labor market data as well as political meddling with Fed policy. The market now waits for US ISM Services PMI and FOMC commentary for additional clarity regarding the USD/JPY direction. Japanese Yen remains flat in response to BoJ’s hawkish stance and better domestic data. But political instability in Japan and anticipation of a Fed rate cut limit large USD/JPY movements. Markets wait for US ISM Services PMI and Fed commentary for short-term direction. • June Bank of Japan meeting minutes reinforced the probability of a rate increase in case inflation and growth conform to expectations. • July Services PMI for Japan was 53.6, the highest growth since February. • The election loss of the ruling party impacts the fiscal stability, which may slow BoJ’s tightening trajectory. • Political pressure on the Fed and weak US job statistics drive the rate cut expectation in September. • The currency pair is unchanged on mild USD buying and positive sentiment in the market. • Improved equities in Asia lower the demand for the Yen as a safe-haven currency. • The US ISM Services PMI and FOMC member remarks are the key to short-run USD/JPY action. The Japanese Yen was unchanged against the US Dollar on Tuesday as investors balanced conflicting economic and political indications from Japan and the US. Bank of Japan meeting minutes in June confirmed year-end rate hike expectations, particularly with Japan’s Services PMI experiencing its fastest growth in months. These events gave some respite to the Yen. Political uncertainty due to the poor performance of the ruling party in recent election results has questioned the fiscal future of the country as well as the policy direction of the BoJ, keeping sharp bullish momentum for the Yen in check. USD/JPY DAILY PRICE CHART SOURCE: TradingView At the same time, the US Dollar received faint support from a generally positive risk mood and optimistic market sentiment, but is increasingly coming under pressure as a result of rising bets for the Federal Reserve to cut interest rates in September. Recent US employment data, coupled with political actions targeting the Fed’s autonomy, have contributed to such expectations. Traders are cautious ahead of some significant US data releases, such as the ISM Services PMI, as well as future speeches from Federal Reserve officials, which would influence near-term market mood and set direction for the USD/JPY cross. TECHNICAL ANALYSIS USD/JPY cross has demonstrated strength above the 50% Fibonacci retracement level of the July rally, maintaining support above the 147.00 level. Closest resistance is around the 147.35 level, then the 147.75 area and the 148.00 psychological level, which also happens to be the 38.2% retracement level. A break and hold above this area has the potential to solidify a near-term low and continue to support the bullish thesis. To the detriment, there’s initial support at 146.85, and a break below 146.60 on a decisive note could gain further downwards momentum to 146.00 and even to the 145.85 area, which is the 61.8% Fibonacci mark. Neutrality of oscillators on the daily chart advises caution, with no robust momentum either way currently. FORECAST If the USD/JPY currency pair can remain above the 147.00 level and break through the near-term resistance at 147.35, it would set the stage for additional advancement. A continued break above the 147.75 area and the 148.00 psychological level would signal fresh bullish energy, and prices might head to 148.50 or even beyond. This bullish scenario would be sustained by any hawkish surprise comments by Fed officials or better-than-anticipated US economic data, which will temporarily counter the overall rate cut expectations. On the negative side, inability to stay above 146.85 will leave the pair vulnerable to further selling pressure. A breakdown below the 146.60 support could provokes a steeper decline to the 146.00 area, and then to the 145.85 level, which is the 61.8% Fibonacci retracement of the prior rally. This bearish scenario may unfold if future US data slows or if political realities in the US further erode confidence in the Fed’s independence, reinforcing expectations of rate cuts.

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Currencies GBP/USD

GBP/USD Inches Close to 1.3500 as Weak US Dollar and BoE Halt Bets Fuel Sterling

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  • June 2, 2025
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GBP/USD exchange rate starts the week strong, moving nearer to the important 1.3500 level as renewed US Dollar weakness keeps pressures on the pair. The weakening of the USD is fueled by increasing expectations of Federal Reserve rate reductions after soft PCE inflation readings and rising apprehensions regarding the US fiscal situation, especially in light of President Trump’s recent spending bill. In the meantime, the British Pound gets support from speculation that the Bank of England will maintain interest rates unchanged at its next June meeting. Yet, generalized caution in markets on account of rising geopolitical tensions and new US-China trade uncertainties might restrict the pair’s gains. The market now looks to future US economic news and Fed Chairman Powell’s statements for additional guidance. KEY LOOKOUTS • Market focus will be on near-term US economic releases, such as the ISM Manufacturing PMI, and remarks from Fed Chair Jerome Powell for additional indications about the direction of Fed interest rates. • Expectations of the BoE halting rate cuts at its June 18 gathering remain underpinning the GBP, with central bank guidance being a key variable in shaping GBP/USD sentiment. • Concerns about the US fiscal deficit, fueled by President Trump’s latest spending budget, and heightened US-China trade tensions can pressure the USD in the short term. • Rising geopolitical tensions—led by Russia, Ukraine, and the Middle East—can drive safe-haven demand for the USD and cap gains in GBP/USD even with underlying positive drivers. GBP/USD pair remains volatile to a variety of key factors that can influence its near-term direction. Market players will be keenly watching Fed Chair Jerome Powell’s forthcoming comments and the newest US macroeconomic reports, such as the ISM Manufacturing PMI, for cues on the Federal Reserve rate outlook. On the British side, hopes that the Bank of England will leave interest rates unchanged at its June 18 meeting remain behind the support for the Pound. But chronic worries over the US fiscal deficit, fueled by President Trump’s recent spending bill, and escalating tensions in US-China trade relations could further pressure the US Dollar to the downside. Meanwhile, wider risk-off sentiment sourced from the geopolitical tensions in Eastern Europe and the Middle East might provide some support to the Greenback, potentially putting a lid on the upside for GBP/USD. The GBP/USD currency pair is supported by hopes of a BoE rate standstill and continued USD weakness fueled by weak US data and fiscal issues. Nevertheless, geopolitical tensions and a conservative global risk tone could cap any further appreciation. Traders are now looking to essential US data and Fed commentary for new direction. •  GBP/USD trades around 1.3500, gaining positive momentum in the face of new USD weakness. •  Expectations for Fed rate cut increase after weak PCE inflation data in the US. •  US fiscal worries deepen following President Trump’s spending bill, putting pressure on the Dollar. •   BoE to keep rates steady in its June 18 meeting, favoring GBP strength. •  Geopolitical tensions in Eastern Europe and the Middle East weigh on global risk appetite. •   US-China trade uncertainty returns after Trump’s remarks, contributing to USD pressure. •   Upcoming US data and Powell’s address are in the spotlight for short-term direction for markets. GBP/USD pair has begun the week on a firm footing, helped by more general weakness in the US Dollar and enhanced confidence in the British Pound. A milder US inflation reading, as expressed through the most recent PCE Price Index, has further fueled bets that the Federal Reserve will choose additional policy loosening in the months ahead. This mood, together with increasing unease regarding the US fiscal situation in the wake of passage of a new government appropriation bill, has further contributed to the downward pressure on the Dollar. In the meantime, the British Pound holds steady, supported by hopes the Bank of England will be less willing to make further cuts in future interest rates, with no near-term moves anticipated at its next policy session. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView All the while, global market sentiment is being influenced by heightened geopolitical tensions and uncertainty regarding US-China trade relations. Recent comments from President Trump, in which he hinted that China might not completely live up to the terms of their trade deal, have also added to investor wariness. Also, all the recent conflicts in places like Eastern Europe and the Middle East still bear down on overall market sentiment. Therefore, investors are remaining close to upcoming US economic data and Federal Reserve speeches by officials, especially Chair Jerome Powell, for any signals that might impact policy expectations and currency market trends. TECHNICAL ANALYSIS GBP/USD is demonstrating signs of bullish momentum as it slowly inches towards the important psychological resistance around the 1.3500 level. Sustained break above this point may pave the way for further appreciation, with the next resistance at 1.3570–1.3600. On the downside, near-term support is at 1.3420, followed by firmer support at 1.3370, where the buyers may get back in. The overall framework is positive, but a decisive breakout above 1.3500 is required to ensure further uptrend. FORECAST GBP/USD pair holds scope for additional upside if prevailing momentum is sustained and the pair is able to achieve a clear breakout above the 1.3500 psychological mark. A change in market sentiment, aided by dovish communications from the Federal Reserve or improved UK economic indicators, could propel the pair to the next level of resistance around 1.3570–1.3600. Moreover, if the Bank of England is reticent about rate cuts while the Fed tends to ease, the policy differences might further favor bullish action in the pair. Conversely, any indication of strength in US economic statistics or even a more aggressive stance at the Fed can revive demand for the US Dollar at the expense of GBP/USD. A failure to hold above the 1.3500 level could trigger a short-term pullback, with initial support at 1.3420, and a further correction feasible towards 1.3370 if bearish momentum takes over. In addition, rising geopolitical tension or

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Currencies

USD/CHF Dips to Two-Week Low as Dollar Weakness and Safe-Haven Flows Drive Swiss Franc Higher

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  • May 21, 2025
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USD/CHF currency pair has continued its losing streak for the third day in a row, dropping to a two-week low at the 0.8220 level due to ongoing US Dollar weakness and an increase in safe-haven buying of the Swiss Franc. The greenback pressure to the downside is fueled by rising US fiscal worries following an unexpected sovereign credit rating downgrade, in addition to growing speculation that the Federal Reserve will lower interest rates further this year as inflation is easing and growth is slowing. Moreover, renewed US-China tensions over chip export controls have weighed on market sentiment, supporting demand for safe-haven assets such as the CHF. In the absence of significant US data releases, eyes now shift to speeches by FOMC members and geopolitical events to drive the near-term path of the pair. KEY LOOKOUTS • Market participants will carefully listen to statements from Federal Reserve officials for new indications of the timing and magnitude of prospective rate reductions. • Rising geopolitical tensions, particularly surrounding chip export ban tensions and retaliatory threats, may support safe-haven flows and benefit the Swiss Franc. • No significant data is scheduled for midweek, but future releases on growth, inflation, or employment might affect USD sentiment and determine the way the pair goes. • Any additional decline in global risk appetite or return of market volatility might make the CHF stronger and continue to apply pressure to USD/CHF. USD/CHF pair is still at risk of further declines on a mix of bearish sentiment around the US Dollar and persistent demand for safe-haven currencies such as the Swiss Franc. Market focus will be placed on near-term speeches from influential FOMC members, which may provide new insights into the Fed’s monetary policy direction, particularly in light of increasing interest rate cut expectations. In addition, increased US-China trade tensions related to chip export restrictions are likely to hurt investor sentiment, potentially triggering additional safe-haven flows into the CHF. With few economic data points on the calendar, broad risk appetite and geopolitics will be instrumental in dictating the near-term direction of the pair. USD/CHF pair continues to face pressure as continuous USD weakness and increasing safe-haven demand for the Swiss Franc act on the pair. Attention now turns to FOMC speeches and US-China trade tensions, which may further impact short-term market mood. •  USD/CHF falls to two-week low, trading near 0.8220 level in face of continuous selling pressure on US Dollar. •  US fiscal woes and a recent sovereign credit rating downgrade remain overhanging the greenback. •  Bets on a rate cut by the Fed become increasingly strong with evidence of slowing inflation and a weak US economic outlook. •  Safe-haven demand for the Swiss Franc is intensifying, further pinning back the USD/CHF pair. •  US-China trade tensions intensify over chip export controls, damaging world risk sentiment and underpinning CHF strength. •  Deficiency of significant US economic data turns attention in the market towards FOMC members’ speeches for policy direction. •  Technical and fundamental bias is still bearish, and there is potential for additional decline in the near future. The USD/CHF currency pair is presently subject to a mix of international and local drivers that are beneficial for the Swiss Franc. Continued unease about the fiscal condition of the U.S., particularly in the wake of recent sovereign credit rating downgrade for the country, has dented investor confidence in the U.S. Dollar. Further added to this is increased speculation that the Federal Reserve can consider interest rate reductions later this year with signs of inflation softening and economic growth slowing down. These trends have helped bring about a consistent weakening of the value of the Dollar, underpinning demand for traditionally safer assets such as the Swiss Franc. USD/CHF DAILY PRICE CHART CHART SOURCE: TradingView Besides local economic issues in the U.S., geopolitical tensions are also at large contributing to guiding market behavior. The renewed trade tension between the U.S. and China—initiated by export controls regarding cutting-edge chip technology—has generated new worries over global trade stability. The sharp response by China to U.S. actions has disturbed markets and spurred a flight to safety, which normally favors such currencies as the Swiss Franc. With little key economic data on the horizon in the near term, market players are keeping a close eye on central bank commentary and geopolitical developments to gauge the next set of moves in global currency markets. TECHNICAL ANALYSIS USD/CHF pair is trending downwards, indicating persistent bearish pressure. The pair is below crucial moving averages, which suggests a dominant short-term bearish bias. Momentum gauges like the Relative Strength Index (RSI) continue to be bearish, indicating ongoing selling pressure. Failure of the pair to maintain above the prevailing support zone may bring about the doorway for further losses. Yet any hoped-for reversal is expected to find resistance close to recent swing highs, where the sellers are likely to return to market. FORECAST USD/CHF pair may emerge if the market mood turns in favor of the US Dollar. This may happen if future speeches by Federal Reserve policymakers take a more hawkish tone, underestimating the probabilities of imminent rate cuts. Second, and perhaps more importantly, any resolution or relief in US-China trade tensions may dampen safe-haven demand, in turn weakening the Swiss Franc and favoring a bounce in the pair. Friendly surprises in major US economic indicators like higher-than-anticipated GDP or inflation figures may also give the USD a much-needed boost in the near future. On the negative side, the USD/CHF cross is still exposed to lower levels as the bearish forces continue. Renewed worries about the US fiscal situation coupled with growing market optimism regarding future Fed rate reductions are most likely to continue exerting downward pressure on the Dollar. Furthermore, if geopolitical tensions between the US and China heighten, Swiss Franc safe-haven flows can continue to strengthen. Under these conditions, the USD/CHF pair might continue its recent losses and challenge lower levels of support as safety demands from investors surpass risk appetite.

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Currencies NZD/USD

NZD/USD Falls Close to 0.5700 as China’s Deflationary Pressures Hit Kiwi Sentiment

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  • March 10, 2025
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The NZD/USD currency pair fell close to the 0.5700 level in Monday’s Asian session, weighed down by worsening deflationary pressures in China. China’s Consumer Price Index (CPI) in February fell 0.7% year-over-year, the steepest decline since January 2024, fueling concerns over soft domestic demand in the world’s second-largest economy—New Zealand’s major trading partner. This has taken a heavy toll on the Kiwi. Yet, pair downside momentum can be curtailed by rising expectations of US interest rate cuts in light of weaker-than-expected Nonfarm Payrolls. The market waits now for Tuesday’s US CPI release for further cues on Fed policy and overall market direction. KEY LOOKOUTS • China’s sharper-than-expected decline in CPI signals weak domestic demand, adding pressure on the Kiwi from the strong trade links with China. • Markets await Tuesday’s US CPI data, which may impact Federal Reserve rate expectations and set the tone for NZD/USD action. • Soft US jobs data stokes rate cut speculation, which may cap USD strength and underpin a small NZD/USD rally. • International risk sentiment and geopolitics could affect safe-haven demand for USD, influencing near-term volatility in NZD/USD trading. The NZD/USD currency pair continues to be under pressure, trading close to the 0.5700 level in the wake of increasing deflationary pressures in China, New Zealand’s biggest trading partner. China’s CPI fall in February indicates poor consumer demand and puts additional bearish pressure on the Kiwi. Downside in the pair, however, may be capped as weaker US Nonfarm Payrolls data has reinforced expectations of future interest rate cuts by the Federal Reserve. Investors now look to Tuesday’s US CPI report, which will be instrumental in determining market sentiment and the short-term direction of the NZD/USD pair. NZD/USD hovers around 0.5700, weighed down by China’s worsening deflation and poor domestic demand. Downside is capped by weaker US jobs data, which enhances Fed rate cut hopes. All eyes now on Tuesday’s US CPI data for new direction. • NZD/USD quotes at 0.5700, weighed down by China’s emerging deflationary pressures. • China’s CPI dropped 0.7% in February, the largest fall since January 2024, indicating soft domestic demand. • New Zealand Dollar falls, as China is one of its key trading partners and economic slowdown dents Kiwi mood. • Soft US Nonfarm Payrolls data boosts expectations of several Fed interest rate cuts in 2024. • Fed policy direction continues to be prudent, with officials emphasizing caution and the requirement for data-driven decision-making. • US CPI releases on Tuesday are likely to be a major driver of the next direction in NZD/USD. • Market sentiment and global risk flows will continue to drive short-term currency pair movement. China’s increasing deflationary pressures have created new doubts about the strength of the world economy, particularly for nations such as New Zealand that enjoy strong trade relations with China. The steep drop in China’s Consumer Price Index (CPI) for February is an indicator of weak domestic consumption and weak household demand. As one of New Zealand’s largest export markets, any Chinese economic slowdown would tend to influence the Kiwi economy indirectly. Market players are becoming more cautious, observing how China’s domestic challenges may impact overall economic activity and global trade flows. NZD/USD Daily Price Chart Chart Source: TradingView Alternatively, the United States also has its own share of uncertainties, especially after the recent Nonfarm Payrolls reading indicated a moderation in job growth. This has promoted increasing speculation that the Federal Reserve will start cutting interest rates sooner rather than later. While policymakers have indicated a data-dependent policy, future economic indicators—particularly the US Consumer Price Index (CPI)—will have a crucial influence on forming expectations. These global macroeconomic trends are expected to drive investor sentiment and near-term policy choices in major economies. TECHNICAL ANALYSIS NZD/USD continues to come under bear pressure, trading near major support areas at the 0.5700 level. The pair has not been able to sustain buying momentum, reflecting that sellers still have the upper hand. A persistent break below this support level could pave the way for additional declines, but a bounce back above near-term resistance levels may reflect a potential change in mood. Traders will carefully observe price behavior around these major levels for reversal or breakout signals, particularly before high-impact economic releases such as the US CPI report. FORECAST If the coming economic data, specifically the US CPI, indicates softer inflation, this would reinforce expectations for Federal Reserve rate cuts and possibly weaken the US Dollar. This situation might present some upside potential for NZD/USD to recover to higher resistance levels. Moreover, any indication of policy stimulus or stabilization in China may enhance market sentiment for the Kiwi and present additional scope for recovery. Conversely, in the event that US inflation numbers turn higher than anticipated, this can temper expectations of premature rate reductions by the Fed, strengthening the US Dollar and putting additional pressure on NZD/USD. Additionally, ongoing deflationary indications and subdued Chinese domestic demand might further drain the New Zealand Dollar. In that scenario, the duo can find it difficult to stay above major support levels and might experience further falls in the near future.

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