- NZD/USD slides further to near 0.5700 as the US Dollar gains ground recovering from the 11-week low.
- A green signal to US President Trump’s tax cut plan has supported the US Dollar.
- The RBNZ reduced its OCR by 50 bps to 3.75% last week, as expected.
The NZD/USD extends its losing spree for the fourth trading day on Wednesday and slides to near the key level of 0.5700 in European trading session. The Kiwi pair weakens further as the US Dollar (USD) bounces back after revisiting the 11-week low. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, recovers to near 106.50.
The Greenback discovers demand after the United States (US) House of Representatives approved US President Donald Trump’s $4.5 trillion tax cut plan with a narrow majority. Investors expect the Trump’s tax agenda would be inflationary for the economy. Such a scenario would force Federal Reserve (Fed) to maintain a restrictive monetary policy stance.
In the meantime, Fed dovish bets for the June policy meeting have escalated after the release of the weak US flash S&P Global PMI data for February released on Friday.
Meanwhile, the New Zealand Dollar (NZD) underperforms since Friday post the aftermath of the Reserve Bank of New Zealand’s (RBNZ) monetary policy announcement on February 19 in which the central bank reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 3.75%, as expected, but guided a cautious stance on further monetary easing.
NZD/USD rebounds strongly from the support zone plotted around 0.5500 on a weekly timeframe. However, the 20-week Exponential Moving Average (EMA) near 0.5776 continues to remain a hurdle for the pair.
The 14-week Relative Strength Index (RSI) attempts to return inside the 40.00-60.00 range. A fresh bearish momentum would trigger if the RSI fails to do the same.
The Kiwi pair could decline to near round-level supports of 0.5400 and 0.5300 if it breaks below the 13-year low of 0.5470.
On the flip side, a decisive break above the February 21 high of 0.5773 could drive the pair to the December 10 high of 0.5867, followed by the November 29 high of 0.5930.
NZD/USD weekly chart
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD Gains look limited by 1.1570 Premium
EUR/USD trades well on the defensive for the second day in a row, revisinting the mid-1.1300s on the back of the continuation of the upside impulse in the US dollar. The move followed firmer US PMI data and news indicating the White House may be considering tariff cuts on Chinese imports.
GBP/USD deflates to the sub-1.3300 area, USD bulls prevail
GBP/USD remained on the back foot Wednesday, slipping below the 1.3300 level as the Greenback gained further traction. The Dollar’s solid performance was supported by strong US data and fading concerns over a renewed escalation in the US–China trade dispute.
Gold corrected extreme conditions, struggles around $3,300
Gold extended its decline on Wednesday, slipping below the $3,300 mark per troy ounce in response to reports from the media suggesting the Trump administration is weighing tariff reductions on Chinese goods, a news that revived hopes of easing trade tensions and reduced demand for the yellow metal as a safe-haven asset.
Bitcoin bullish momentum builds as premium exceeds 9% for first time in three months
Bitcoin price is extending its gains, trading above $94,000 at the time of writing on Wednesday, following a two-day rally of 9.75% so far this week. BTC rally gathers momentum as trade war fears ease, following US President Donald Trump’s downplaying of tensions with China.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.