NZD/USD:Declines towards 0.61 as US Biden wants tax riches More!

The NZD/USD pair is facing downward pressure and is currently approaching the round-level support of 0.6100. This is due to US President Joe Biden's recent proposal to increase corporation tax from 21% to 28%, as well as implementing a 25% billionaire tax and levies on rich investors. These measures are expected to contract fiscal policy and restrict the Consumer Price Index (CPI) from further increasing. The proposal has also put pressure on the S&P500 futures, which are currently showing losses in the Asian session.

The USD Index is expected to resume its upside journey, hovering above 105.20 due to the higher taxes proposal. This week, the US Nonfarm Payrolls (NFP) data will be in the spotlight, with a consensus of fresh 203K payrolls added in February. Investors will also be paying attention to the Average Hourly Earnings data, which is expected to increase to 4.8% on an annual basis.

China's Consumer Price Index (CPI) data is also on investors' radar, with a forecasted decline to 1.9% from the prior release of 2.1% on an annual basis. The monthly CPI is likely to trim to 0.2% from the former release of 0.8%. If inflation continues to decrease, it might force China's administration and the people's Bank of China (PBoC) to infuse more liquidity into the economy. This could benefit New Zealand, one of China's leading trading partners, and bring more business for the New Zealand Dollar.

In the Asian session, the NZD/USD pair failed to recapture the critical resistance of 0.6120. This could be due to the proposal of higher taxes from US Biden, as well as rising interest rates by the Federal Reserve (Fed). The Fed's actions, combined with the fiscal policy measures, might have a synergic impact on US inflation, leading to a decrease in consumer spending.

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