NZD/USD erased about half of its early gains in Monday’s early European trade after sellers appeared above 0.6000. The pair still traded 0.13% higher, near 0.5980.
The US Dollar stayed under pressure as uncertainty around US trade policy returned. The US Dollar Index (DXY) fell 0.35% to around 97.45.
Supreme Court Tariff Ruling Fallout
The US Supreme Court ruled that President Donald Trump’s tariff policy was unlawful. Trump then responded by announcing 15% global tariffs.
The US Dollar also weakened after soft Q4 GDP data and slower-than-expected S&P Global PMI growth for February. Markets will also track speeches from Federal Reserve officials this week.
Traders expect the Fed to keep rates unchanged at the March and April meetings, according to the CME FedWatch tool. In New Zealand, Q4 Retail Sales rose 0.9%, above the 0.6% forecast, but below the prior 1.9%.
The New Zealand Dollar could also react to the People’s Bank of China’s policy decision on Tuesday.
Dollar Weakness And Market Volatility
In February 2025, the US Dollar weakened after the Supreme Court’s tariff ruling. When a 15% global tariff was announced soon after, uncertainty jumped and the Dollar Index fell to about 97.45. This helped drive a volatile year for FX markets.
Trade tensions then escalated. By mid-2025, major partners such as the European Union and China introduced retaliatory measures. Growth slowed, and World Trade Organization data later showed global merchandise trade volume fell 1.2% in Q4 2025. US manufacturing PMIs were also consistently weak in the second half of the year.
As the economy cooled, the Federal Reserve shifted policy. It delivered two 25-basis-point rate cuts in fall 2025 to support growth. The Dollar Index extended its decline and now trades near 95.50. This ongoing weakness has been a key theme for currency markets.
NZD/USD benefited from this backdrop, rising from around 0.5980 a year ago to a range near 0.6350 today. New Zealand’s steadier economy and its trade links with Asia helped limit the impact of the global slowdown. Over the last 12 months, the Reserve Bank of New Zealand cut rates only once, while the Fed eased more, widening the yield gap in NZD’s favor.
In the weeks ahead, the US Dollar may stay biased lower while trade disputes continue. Derivatives traders may look at strategies that benefit from further NZD/USD gains, such as buying call options to capture upside while limiting downside risk. Since currency volatility indices rose more than 30% after last year’s tariff headlines, options can also help keep risk defined.
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