The NZD/USD pair is encountering persistent selling pressure, failing to capitalize on a brief recovery from the 0.5725-0.5720 range. The currency pair is currently trading with a slight negative bias around the mid-0.5700s, marking its third consecutive day of decline amid a modest uptick in the US Dollar (USD).
This downward movement follows the Federal Reserve’s recent stance, maintaining its forecast for only two 25 basis points rate cuts by the end of this year. Fed Chair Jerome Powell also indicated that achieving the inflation target might be delayed due to retaliatory tariffs imposed by other nations on the US. This sentiment has provided support for the USD, contributing to its bounce from a multi-month low and acting as a headwind for the NZD/USD pair.
In addition to these factors, geopolitical risks, including ongoing conflicts in the Middle East and the prolonged Russia-Ukraine war, are boosting the safe-haven demand for the US Dollar. Despite this, market expectations that the Fed may resume rate cuts sooner than anticipated due to concerns over a tariff-induced slowdown in the US economy could limit aggressive USD buying.
Furthermore, recent optimism regarding China’s stimulus measures provides some support for antipodean currencies, including the New Zealand Dollar (NZD). With no significant economic data releases from the US expected, it remains prudent to wait for further confirmation before assuming that the NZD/USD pair’s uptrend, which began earlier this month, has exhausted itself and is poised for additional losses.
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