Ella 
During early European trading on Monday, NZD/USD rose slightly below the 0.6000 mark. The U.S. Dollar Index (DXY) fell below 104.50, providing support for the pair’s modest gains. In the absence of top economic data from New Zealand, USD price dynamics will be the main driver for the pair. The pair is currently trading around 0.5995 with an intraday gain of 0.04%.
The Federal Reserve (Fed) kept its benchmark interest rate in a range of 5.25%-5.5% at its March meeting last week. Fed Chairman Jerome Powell stressed after the meeting that policymakers are likely to cut interest rates later this year, but only if they have greater confidence that inflation is heading toward their 2% target. . Nonetheless, dovish comments from Fed officials are likely to weigh on the U.S. dollar (USD) and be positive for NZD/USD in the short term.
The U.S. Federal Reserve maintained its midpoint dot outlook for 2024 and signaled three quarters of interest rate cuts this year. However, Atlanta Fed President Raphael Bostic said on Friday that he expects only one rate cut this year, rather than the two previously forecast, due to persistent inflation and stronger-than-expected economic data.
In terms of the New Zealand dollar, the International Monetary Fund (IMF) noted in a report that as inflation returns to the target range, the Reserve Bank of New Zealand will have room to start cutting interest rates later this year. The IMF added that it expects New Zealand’s inflation rate to return to the central bank’s target of 1-3% in the third quarter of this year.
