The NZD/USD pair has faced selling pressure while attempting a break above the immediate hurdle of 0.6260. The asset has witnessed offers after the Reserve Bank of New Zealand (RBNZ) reported the inflation expectations at 3.07%, lower than the prior release of 3.29%. It could be a sign of exhaustion in the price pressures but more warrants for the claim are still desired.
For now, price pressures are already soaring in the NZ economy and have not displayed any exhaustion sign yet. As per the June print, an inflation rate of 7.3% is sufficient to create headwinds for the households. To combat the same the RBNZ is continuously accelerating its policy tightening measures. RBNZ Adrian Orr has already elevated its Official Cash Rate (OCR) by 2.50%.
On the US dollar front, the US dollar index (DXY) has surrendered its entire intraday gains and is auctioning near the day’s open at 106.60. The DXY has faced selling pressure while attempting a break above the critical resistance of 106.80. This week, investors are focused on the release of the US Consumer Price Index (CPI), which will release on Wednesday.
The annual inflation figure is likely to remain lower at 8.7% against the prior release of 9.1%. Oil prices have remained in a negative trajectory in July, which might be the critical factor for a decent slippage in the price rise index. While the US CPI that doesn’t include volatile food and oil prices may improve to 6.1% from the prior print of 5.9%.
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