NZD/USD stayed near multi-month highs on Wednesday and remained bullish into the second half of the week. The US Non-Farm Payrolls report showed 130K jobs added in January versus a 70K forecast. However, an 898K downward benchmark revision to 2025 payroll data weighed on the US Dollar. The Federal Reserve kept rates at 3.50% to 3.75% at its January meeting, and markets are pricing in two cuts this year. In New Zealand, the Reserve Bank of New Zealand is expected to hold the Official Cash Rate at 2.25% on 18 February. The bank has already delivered six cuts through 2025, taking rates from 5.50% to 2.25%.

Key Data And Central Bank Focus

Inflation is near the top of the 1% to 3% target band. Key releases ahead include the Business NZ PMI for January on Thursday and RBNZ Inflation Expectations for Q1 on Friday. Friday also brings the US CPI for January. Consensus is 2.5% year-on-year for headline CPI and 0.3% month-on-month for the core reading. On the daily chart, NZD/USD was at 0.6051, up 0.10%, and just below resistance at 0.6094. The pair is above the 50-day EMA at 0.5881 and the 200-day EMA at 0.5833. It has been consolidating between 0.5960 and 0.6094, with a November low near 0.5580. NZD/USD is holding near 0.6050 and consolidating after a strong rally. The main driver is a weaker outlook for the US labour market, reinforced by the 898,000 downward revision to 2025 job numbers. Weekly initial jobless claims around 220,000 also support the view that the US economy is cooling. The main theme for the coming weeks is policy divergence between the Federal Reserve and the Reserve Bank of New Zealand (RBNZ). The Fed is widely expected to cut rates at least twice more this year. In contrast, the RBNZ faces firmer inflation pressures at home. With New Zealand’s Q4 2025 inflation still high at 4.7% year-on-year, the RBNZ is likely to keep its cash rate unchanged at 2.25% at the 18 February meeting. The Kiwi is also supported by stronger dairy prices, a key New Zealand export. The Global Dairy Trade Price Index has risen in four of the last five auctions, which can help improve New Zealand’s trade balance. This contrasts with broad pressure on the US Dollar as markets price in more Fed easing.

Strategy And Risk Management

For derivatives traders, this setup suggests positioning for a possible upside break in NZD/USD. Buying call options with strike prices above the key 0.6094 resistance could offer exposure to a move toward 0.6150 and 0.6200. However, US CPI on Friday is a key risk. A hotter-than-expected inflation print could trigger short-term volatility and support the US Dollar. Risk management matters because the pair has been ranging for about a week. A sustained break below support at 0.5960 would suggest bullish momentum is fading, and could open a pullback toward the 0.5880 area. Traders may use these levels to set stop-loss orders, or consider put options to hedge against a downside reversal. Create your live VT Markets account and start trading now.

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