The dollar has reached near to its weakest level since early January as Treasury yields eased amid Federal Reserve insistence that stimulus will continue despite current inflationary pressures.

Whereas New Zealand’s currency rose after the central bank said it would maintain stimulatory monetary policy settings until its inflation and employment targets are achieved.

The RBNZ has matched broad forecasts of announcing no change in the benchmark rate of 0.25%, and there are not any changes in the bond purchase programs. However, the NZ central bank’s statements suggested a rate hike in late 2022.

Elsewhere, Westpac expects the RBNZ to upwardly revise its economic forecasts for 2021. It  is also projecting that inflation will easily surpass 2 per cent this year, but adds that the RBNZ has anticipated this and will view higher inflation as transitory. But Federal Reserve, which has dismissed a recent surge in inflation as merely temporary. Finally, Westpac does not expect the central bank to hike rates before 2024.

On the other hand, A host of Fed officials overnight echoed the sentiments of Chair Jerome Powell that a spike in inflation will be transient and ultra-easy policy continues to be warranted. “I have not seen anything yet to persuade me to change my full support of our accommodative stance,” Chicago Fed President Charles Evans said in a speech on Tuesday.

“Right now, policy is in a very good place,” San Francisco Fed President Mary Daly told CNBC the same day. “We need to be patient.”

NZD/USD 4 Hour Chart:

Support: 0.7205 (S1), 0.7186 (S2), 0.7164 (S3).

Resistance: 0.7247 (R1), 0.7269 (R2), 0.7289 (R3).

RBNZ’s move has helped the kiwi whereas the Fed’s dovish move weakness dollar. We expect a bullish trend for NZD/USD.