NZD/USD pulled back from near 0.6000 after the RBNZ kept rates on hold last week and stayed dovish. The bank said policy is likely to remain supportive for some time. It also noted a rate rise later in 2026 is possible, but markets are not fully pricing that in.
Markets have scaled back tightening expectations. Only one hike is now expected by year-end, down from two before the decision. A September move is now priced at about a 40% chance.
Us Tariff Policy Shift
In the US, the Supreme Court ruled 6–3 on Friday to strike down the administration’s IEEPA tariffs. Trump then threatened a new 15% global tariff under Section 122 of the Trade Act, which could take effect in the coming months.
Section 122 includes a 150-day legal limit, and importer refunds could exceed $160 billion. This happens as Fed speakers headline Tuesday’s US calendar, while Australia’s CPI on Wednesday could move Kiwi crosses.
On Monday, NZD/USD fell 0.34%, slipped below 0.5960, and then rebounded toward 0.6000 after an earlier rally faded. The pair is still above the 50-day EMA at 0.5915 and the 200-day EMA at 0.5860. The November low near 0.5600 remains the base of the broader uptrend.
The Stochastic Oscillator has turned lower and moved below its midpoint after the year-to-date high at 0.6094. Support sits at 0.5956 and 0.5900. Resistance is at 0.6000 and 0.6094, with 0.6200 above.
The RBNZ’s dovish tone is weighing on the Kiwi, especially after last week’s hold. Softer data also supports the bank’s caution: New Zealand’s Q4 2025 GDP rose just 0.2%, below expectations. That weakens the case for holding the New Zealand dollar versus the US dollar.
Risks To Nzd Outlook
At the same time, renewed US trade uncertainty is a key risk for risk-sensitive currencies like the NZD. The threat of new global tariffs has pushed the VIX (a major measure of market fear) up more than 15%, to near a three-month high around 18.5. In this kind of backdrop, investors often shift into the safety of the US dollar.
We are also watching for weakness in New Zealand’s major trading partners. China’s January 2026 manufacturing PMI fell back into contraction at 49.8. The Global Dairy Trade price index also dropped 2.1% at the latest auction. Together, these signals point to potential pressure on export revenues.
With mixed signals, we see value in using options to position for possible downside while limiting risk in choppy trading. NZD/USD is still holding above the 50-day moving average near 0.5915, but fundamentals suggest that level could be challenged soon. Buying put options with a strike below 0.5950 could be a sensible way to trade a potential break lower.
This setup also echoes the 2018–2019 trade disputes (viewed from a 2025 perspective). Back then, similar tariff uncertainty helped drive NZD/USD down more than 10% over several months. We should be ready for higher volatility in the weeks ahead.
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