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Greenback Looking For Rebound


Federal Reserve’s officials have almost given up on their 2 percent inflation which they formally intended at January 2012. However, the central bank’s policy members have expressed confidence of raising the interest rates despite a fallen inflation rate goal of 2 percent.

With the recent US data releases which turned out to be disappointing and the delay in the healthcare bill, the Fed’s forecasts that the inflation goal will be achieved gradually is unlikely to happen in the near future.

A dropping inflation rate means that the Federal Reserve is allowing the US labor market to function below its optimum potential. Continuous unemployment rate and lower wage rates have fallen down to record lows. If there is a further drop in the inflation rates, then it will be very difficult for the Fed to raise the interest rates in June along with the expected additional rate hike for this year.

Despite of a weakening inflation, the Fed has expressed confidence that the economic growth and inflation rates would improve in the near future. Also the Fed’s members have remained hopeful to raise the interest rates for this year going forward.

NZD/USD price suffered from the stability and formed an obstacle against the negative attempts at 0.7331 with the pair keeping the momentum below the resistance that is located at current levels. The pair has been moving in a sideways trend for some time now with the resistance holding the area. Therefore, we must wait for the price to renew the negative attempts for achieving the waited targets at 0.7279.

In spite of the repeated positive attempts for the NZD/USD price, its attempt to settle above the resistance levels has failed. Hence, we prefer the bearish domination if the resistance is settled at current levels. With the stochastic surpass at 50.0 levels, we expect the price to decline towards 0.7279 and form the first negative target in the near period. The pair shall look for a test at the 50EMA and the price action signals around this area should indicate the next move of the pair once it reaches these levels.

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