Euro is better than the US dollar. The EuroZone fundamental which js better than America became the supporter of the EUR/USD bullish yesterday. It experienced the significant increase. 

When this news released, the EUR/USD pair increased by 0.31% to 1.2253. That was the highest level since 25 of February. The index of IFO business climate of Germany also has the same trend. 

It was up from 96.6 to become 99.2 in May. That result was higher than the expectation of achievement in 98.2. It also become the highest level in the last two years. 

Furthermore, the loosening social limitation in several European nations included Germany and the wider COVID-19 vaccination in that continent is successfully increasing the public optimism. 

USD is Pressed by the Economy Data

In the other side, the US dollar is consolidating in its low level since the 18 of May. Yesterday night, that currency was weighted by the release from CB consumer confidence which was decreased. 

That was slipped from 117.5 and became 117.2. The market consensus before expected an increase to 119. The data release was not in line with the estimation made by some parties. 

The US dollar bearish trend is also based on the Fed’s dovish attitude. It has a potential to make the American investment stream is out to the developed countries which are the economic situation is started to be recovered. 

From several speeches made by The Fed’s officials, the dovish sentiment is still looked quite dominant. The US central bank will not change their accommodative policies soon. 

The Effect of James Ballard Comment

After the comment made by James Bullard, a statement made by Charles Evans as the Fed Chicago President yesterday night sated that the newest inflation report in America is only a reflection. 

That was the reflection of the price adjustment after the pandemic. Meanwhile, on Wednesday, the RNBZ or the Reserve Bank of New Zealand maintained the benchmark of interest rate in the level of 0.25%.

It means that it was in line with the market expectation. That New Zealand central Bank is also still continuing its loosened quantitative program. The value is about $100 million. 

They will maintain the debt fund whuch was not changed from the monetary policy last February. Generally, the RNBZ statement is not too much change from the past period plan. 

The Stimulus Plan will be Continued

The central bank will continue the stimulus program up to the employment target and inflation reach the target. Meanwhile, the further economic data is still becoming a focus before making a decision. 

In the announcement made yesterday morning, RNBZ highlighted the New Zealand economy condition. Until now, it is not fully recovered to the pre-pandemic era. Tourism is becoming the best sector so far. 

Just like others, it is also not recovered yet. It is because the coronavirus cases are still high, especially in the Asian zone. RNBZ still needs more time before deciding the monetary policy direction. 

The Rate Hike Issues Appear

The release of RNBZ interest rate announcement yesterday morning was generally quite positive. It is because they break the market expectation which predicted that the Central Bank will throw the dovish statement.

This condition will support the New Zealand dollar to the USD. When this news released, the NZD/USD pair was around 0.7292 or increased by 0.96 percent from the open daily price. 

Although RNBZ maintained its interest rate and view about the general monetary policy, there is another statement from that central bank representative. They recommended the increasing interest rate. 

It is especially in the end of 2022. That comment becomes a catalyst that supports the significant increase of the NZD/USD yesterday morning. However, everything is based on the investors’attention statement.