Anna 
The NZD/USD pair continued its upward movement, trading around 0.6140 during early European hours on Tuesday. The US Dollar (USD) faced headwinds due to downbeat US Treasury yields, as an improved US balance sheet led to higher prices for US Treasury bonds, putting downward pressure on the Greenback.
The US Dollar Index (DXY) held steady around 103.50, with 2-year and 10-year yields on US Treasury notes standing lower at 4.29% and 4.03%, respectively, at the time of reporting. Additionally, heightened tension in the Middle East contributed to prevailing market risk spurs.
Investors are closely eyeing Tuesday’s releases of the Housing Price Index and Consumer Confidence figures to gain further insights into the US economic landscape. The anticipation among economists is that the first rate cut may occur in May or June, though the possibility of a cut at the Federal Reserve’s March meeting is not ruled out. The upcoming Federal Open Market Committee (FOMC) statement on January 31 is expected to yield no adjustment.
The New Zealand Dollar (NZD) received a boost as the People’s Bank of China (PBoC) considers a potential reduction in the Medium-term Lending Facility (MLF) rate. Additionally, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway remarked that recent economic data indicates the effectiveness of monetary policy. However, he also noted that there is still a journey ahead before inflation reaches its target midpoint of 2.0%.
As the NZD/USD pair maintains its upward trajectory, traders and investors will closely monitor global economic developments, geopolitical tensions, and central bank policies for potential market shifts in the coming sessions.
