The NZD/USD exchange rate is around 0.5900, facing pressure due to cautious market sentiment and mixed economic signals. Even with weaker-than-expected US inflation and retail sales data, comments from Federal Reserve Chair Jerome Powell helped support the US Dollar. Recent US data showed the Producer Price Index rose by 2.4% in April, slightly below the expected 2.5%. Retail Sales increased by 0.1%, which was lower than market expectations. These outcomes have led to speculation about a possible Federal Reserve rate cut in 2025. Powell mentioned the need to revisit policy frameworks because of ongoing supply issues, which contributed to the US Dollar’s stability.

New Zealand Economic Conditions

In New Zealand, recent fiscal announcements had little effect on the NZD. Finance Minister Nicola Willis announced a NZ$190 million social investment fund aimed at supporting vulnerable groups. However, the market’s focus is shifting to upcoming reports, like the Business NZ Performance of Manufacturing Index and the RBNZ inflation expectations survey, which could affect future rate decisions by the Reserve Bank of New Zealand. From a technical perspective, NZD/USD remains in a bearish trend, fluctuating between 0.5860 and 0.5916. The Relative Strength Index and MACD show weak momentum. Neutral signals from Stochastic %K, CCI, and Bull Bear Power imply limited chances for a rebound. Short-term indicators suggest continued downward pressure, with only the 100-day SMA providing slight support. Crucial support levels are 0.5860, 0.5846, and 0.5829, while resistance sits at 0.5878, 0.5883, and 0.5884. The current price of NZD/USD near 0.5900 indicates weakness in the Kiwi, with limited market enthusiasm and global uncertainties affecting demand. This pressure persists even though US inflation is lower than expected and retail sales have shown only modest growth. Despite these US data points, the US Dollar remains stable, largely due to Powell’s comments that eased fears of a rapid policy shift.

Market Reactions and Implications

Powell emphasized that the Federal Reserve must adjust its economic models due to ongoing supply disruptions, signaling a cautious approach to future rate changes—more about monitoring inflation risks than immediate cuts. This cautious tone helped stabilize the US Dollar for now. For those engaged in currency contracts, this could be significant as summer approaches, especially regarding the timing of the first potential rate cut. Meanwhile, across the Tasman, New Zealand’s fiscal measures to boost domestic sentiment didn’t make much of an impact in the currency market. Willis’s announcement about investing in vulnerable sectors could lead to long-term changes, but the FX market remained largely indifferent. Upcoming releases, like the Business NZ Manufacturing Index and the Reserve Bank’s inflation expectations, are expected to have a greater impact on monetary policy directions set by the RBNZ. From a technical standpoint, the pair is restricted by clear resistance levels, just under 0.5920. The trading range of 0.5860 to 0.5916 suggests inactivity with a negative bias. Current chart indicators do not indicate a breakout. The RSI is close to oversold territory without divergence. The MACD is below the signal line, and oscillators like Stochastic %K and CCI indicate uncertainty—neither buyers nor sellers seem ready to take control. The 100-day simple moving average still provides some support, but the general trend points downward. A drop to 0.5846 or even 0.5829 shouldn’t be ruled out if sentiment stays weak. On the other hand, any recovery attempts will face resistance between 0.5878 and 0.5884. A convincing move above these levels is needed to change the current outlook. In summary, the US continues to take a cautious approach regarding rate cuts, despite softness in consumer spending. Meanwhile, New Zealand looks to upcoming data for potential changes, although early signs suggest that traders prefer short or flat positions. The market continues to react to macroeconomic signals and technical trends, indicating thoughtful hesitation rather than impulsive moves. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now