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NZD/USD Retreats Below 0.6000 Amid Mixed NZ Data and Pre-FOMC Caution

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  • May 7, 2025
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NZD/USD pair slipped back below the key 0.6000 level after briefly touching a two-week high during the Asian session, pressured by mixed New Zealand labor market data and a modest rebound in the US Dollar. Though US-China trade talk news and stable unemployment levels initially buoyed the Kiwi, weak wage growth and minimal job increases rekindled expectations of additional rate cuts by the RBNZ. In addition, risk-off sentiment in front of the Federal Reserve’s coming policy decision and Chair Powell’s comments has speculators holding off on new directional wagers, leaving the pair on the back foot. KEY LOOKOUTS • Market players wait for the result of the Fed’s two-day conclave, with attention on the policy statement and the signals on future rate cuts by Chair Jerome Powell. • Weaker wage growth and muted employment increases continue to underpin bets that the RBNZ may cut rates to 2.75% by the end of the year, bearing down on NZD sentiment. • Hopes of resumed US-China trade negotiations in Switzerland could provide some support to risk-sensitive currencies such as the NZD, subject to developments. • A slight US Dollar recovery puts further pressure on the pair to the downside, and any sustained US Dollar strength would limit NZD/USD gains in the near term. NZD/USD pair continues to be exposed to further weakness as investors wait for important macroeconomic events and policy announcements. The Federal Reserve’s next interest rate decision and Chair Jerome Powell’s words will be carefully monitored for rate path guidance, which will have a substantial bearing on USD demand. Meanwhile, ongoing bets on rate cuts by the Reserve Bank of New Zealand—despite soft wage growth and lackluster employment numbers—are set to cap any meaningful upside for the Kiwi. In addition, some short-term relief may be provided by developments in US-China trade talks, but overall sentiment is still cautious and keeps the NZD/USD pair under selling pressure. NZD/USD pair is under downward pressure as markets look to the Fed’s policy decision and direction from Chair Powell. Combined New Zealand jobs data and expectations for a rate cut by the RBNZ continue to keep the Kiwi weighed down, with US-China trade talks providing minimal support. • NZD/USD retreated below 0.6000 after momentarily reaching a two-week high at around 0.6025 in the Asian session. •  Confusing New Zealand jobs data provided early support but couldn’t hold pace because of slow wage growth and limited employment gains. •  RBNZ rate cut bets are still intact, with markets pricing in a potential fall to 2.75% by the end of the year. •   US Dollar strength puts pressure on the pair with a modest bounce before pivotal Fed events. •   FOMC rate decision and Powell testimony are in high focus for new guidance on US monetary policy and rate expectations. •  Optimism on US-China trade talks provided a fleeting lift to market mood but not enough to sustain a rally. •  Market players are hesitant, staying out of large positions until after the Fed announcement and the related policy guidance. NZD/USD currency pair is currently driven by a combination of economic data and overall market mood. New Zealand’s recent labor market data displayed stability in unemployment rates, yet weak wage growth and minimal employment generation have contributed to concerns about the economic pace of the nation. These pressures have supported expectations that the Reserve Bank of New Zealand would potentially weigh further interest rate reductions in the months ahead to ensure domestic growth. The RBNZ’s Financial Stability Report also noted dangers related to global trade uncertainty, which remains a drag on the economic forecast. NZD/USD DAILY PRICE CHART CHART SOURCE: TradingView Meanwhile, market focus is on the approaching Federal Reserve meeting. Investors are anxiously awaiting any indication from the Fed on the direction of future US monetary policy. Chair Jerome Powell’s comments will be crucial in determining expectations for interest rate movements. Concurrently with this, progress in US-China trade relations, notably the scheduled talks in Switzerland, is also under close observation. These global developments will have an important bearing on investor attitude and currency market direction in the short term. TECHNICAL ANALYSIS NZD/USD could not hold above the 0.6000 psychological level, showing high resistance around the 0.6020–0.6025 region. The pair’s rejection around this region may indicate a temporary halt in the recent upsurge. Major support comes in around 0.5960, and then firm demand around 0.5925. A near-term close back above 0.6000 would be required to renew short-term bullish sentiment, or a break below support levels may risk further losses. Momentum indicators also soften, underpinning the defensive near-term outlook. FORECAST Should risk appetite strengthen and market sentiment improve—especially on the back of favorable US-China trade talks news or a dovish stance by the Federal Reserve—NZD/USD may try and recapture the 0.6000 level. A continued break through this level could lead to further advances towards the 0.6025 resistance area, and if pace is maintained, the pair may aim at the 0.6060–0.6080 band. Also, any RBNZ surprise indicating a more dovish approach towards rate reductions could also provide upside support to the Kiwi. To the contrary, in the event of the Fed pursuing a hawkish stance or transmitting rate delay hints, the US Dollar would surge higher, depressing NZD/USD further. A violation below near-term support at 0.5960 would open up the pair for further declines down to 0.5925, with prospects for extended decline down towards 0.5900. Additionally, sustained weakening in New Zealand’s economic markers or a weakness in global trade sentiment would contribute to the bearish pressure in the near term.

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Currencies GBP/USD

GBP/USD Price Prediction: Bulls Target 1.2724 In Continuing Uptrend

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  • March 4, 2025
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The GBP/USD currency pair trades below the 1.2700 level at a three-month high, looking bullish in an uptrend channel formation. The 14-day RSI is still above 50, indicating firm momentum, while the pair stays above the nine- and 14-day EMAs to confirm short-term strength. Near-term resistance is at 1.2724, with further potential gains to 1.2780 and the psychological 1.2800 figure. On the negative side, early support is at 1.2639, then 1.2613, with a break below having the potential to undermine the bullish bias and leave the pair vulnerable to 1.2560. A firm fall below the channel could take losses down to the three-month low of 1.2249. KEY LOOKOUTS • GBP/USD has immediate resistance at 1.2724, with a possible breakout taking it to 1.2780 and the psychological 1.2800 level in the near term. • The nine-day EMA at 1.2639 is also main support, with a breakdown below potentially undermining bullish momentum and sending the pair to 1.2560. • The 14-day RSI is still above 50, suggesting ongoing bullish momentum and backing the expectation of further strength in the near term. • A clean break below the rising channel would change the trend bearish, leaving the pair vulnerable to the crucial support level of 1.2249. The GBP/USD currency pair continues in a bullish trend, trading below the 1.2700 level with the important resistance of 1.2724 in sight. A clean break above this level may take the pair to 1.2780 and the psychological level of 1.2800. The 14-day RSI remains above 50, indicating ongoing bullish pressure, and the pair trading above the nine- and 14-day EMAs, affirming short-term strength. On the negative side, the nearest support is at 1.2639, with support at 1.2613 afterwards. A fall below these levels might undercut bullish sentiment, leaving a fall to 1.2560 or even the three-month low at 1.2249 if the rising channel breaks. GBP/USD is still bullish, trading below 1.2700 with major resistance at 1.2724. A breakout would take it to 1.2780, while support at 1.2639 would cap downside risks. A fall below the rising channel would undermine momentum, revealing 1.2249. • A breakout above this level would take GBP/USD to 1.2780 and the psychological resistance at 1.2800. • The 14-day RSI is still above 50, reflecting ongoing strength and a bullish bias in the market. • These levels (nine- and 14-day EMAs) serve as integral support levels, holding off an anticipated downside action. • GBP/USD continues to trade within an upward-moving channel, emphasizing a bullish outlook in the near term. • A breach through the lower trend line of the upward-moving channel at 1.2560 may erode the bullish action. • Depending on bullish strength being maintained, GBP/USD may test 1.2800, which is a serious psychological resistance level. • A sharp fall below the 1.2560 support area may leave the pair vulnerable to further losses, testing the three-month low at 1.2249. The GBP/USD currency pair continues to attract attention from investors, mirroring the economic interactions between the US and the UK. Traders keenly monitor economic data releases, interest rate announcements, and geopolitical events impacting the pair’s price action. Other factors, including inflation reports, jobs reports, and monetary policies, also influence the market’s sentiment. Moreover, more general global events, such as trade policy and economic projections, also influence demand swings for both the British pound and the US dollar. GBP/USD Daily Price Chart Chart Source: TradingView Risk appetite also influences the sentiment of the GBP/USD market, with currency flows affected. In periods of economic stability, traders tend to opt for riskier assets at the expense of the pound, while uncertainty tends to fuel demand for the US dollar as a safe-haven. The dynamic interaction between Bank of England monetary policies and Federal Reserve monetary policies is still the principal driver that guides long-term currency pair trends. Additionally, economic performance, political events, and trade relations in both nations will continue to influence market expectations, making GBP/USD an important pair to follow for forex traders and investors. TECHNICAL ANALYSIS GBP/USD is bullish as the currency pair continues in an uptrend channel, pointing to ongoing bull run. Price action continues to be above pivotal moving averages, supporting short-term strength, and the 14-day RSI remaining above 50 showing consistent buying pressure. Resistance is seen at 1.2724, with a possible breakout setting the stage for further advances to 1.2780 and the psychological mark of 1.2800. On the other hand, near-term support is at 1.2639, with a break below having the potential to test the lower limit around 1.2560. A firm move below this level has the potential to change momentum in the bears’ favor, challenging the overall uptrend. FORECAST GBP/USD might see its further ascend, particularly in case that momentum remains healthy on the bull and the pair gets past the resistance level of 1.2724.  A breach could open up even more strength all the way towards the subsequent level of resistance of 1.2780 before the psychologically charged level of 1.2800. Encouraging economic news in the UK, like better GDP growth, falling inflation, or a hawkish policy from the Bank of England, may continue to underpin the strength of the pound. A weaker US dollar, propelled by dovish messages from the Federal Reserve or risk-on flows in international markets, may also add to bullish pressure in the pair. To the downside, GBP/USD has major support at 1.2639, and a move below it will perhaps indicate the loss of momentum, triggering a fall to 1.2560. In case bearish pressure builds and the pair moves below the rising channel, a further fall is possible, with the next strong support being at 1.2500. Factors that may trigger a bearish perspective are dismal UK economic data, a tougher Federal Reserve line on interest rates, or heightened risk aversion in international markets that boosts demand for the US dollar. A more severe correction may leave GBP/USD open to additional downward risks, and potentially challenge the three-month trough of 1.2249 if selling pressures continue.

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Currencies EUR/USD

EURUSD Bounces Back to the Highs of Almost 1.0550 After a Dive from New Yearly Lows

EURUSD Bounces Back to the Highs of Almost 1.0550 After a Dive from New Yearly Lows EUR/USD erased substantial losses after a run of five consecutive negatives, bouncing to the areas around 1.0540 during Asian trading on Friday. This followed the US Dollar Index (DXY) taking its first retreats from the newest yearly high reached at 107.06. Both dovish comments by Federal Reserve Chairman Jerome Powell and mixed US economics data influenced the move. Despite the strength in Euro, the European Central Bank still remains cautious on the economic outlook, leaving its future movements toward the pair subject to developments both in the US and the Eurozone. EUR/USD’s Recent Rebound and the Pullback in the US Dollar The currency pair EUR/USD recovered some of the losses because of a correction within the US Dollar. As the US Dollar Index (DXY) had skyrocketed to 107.06 for the year, the reversal in this upward trend for the greenback, as well as its corresponding reversal for the Euro itself, contributed to a modest rebound for the Euro, and EUR/USD advanced toward 1.0540. US Dollar Pulls Back Some of the factors behind the U.S. Dollar’s pullback have been the slowdown of so-called “Trump trades,” that had been helping the dollar out in the first half of the year. These trades-tied very closely to expectations surrounding economic policies from the previous U.S. administration-have started to lose some of their momentum as market sentiment shifts. Simultaneously, comments from Fed Chair Jerome Powell regarding the US economy lighten the tone of the US Dollar. Powell described the US economic performance as “remarkably good, thus giving Federal Reserve some leniency to slowly trim its interest rates. Contrastively, such rhetoric is diametrically opposed to the more hawkish tone that had prevailed in communications until now by the Fed, thus questioning a change in policy that should continue to weaken the Dollar at least in the short term. Mixed US Economic Data Powell’s comments came simultaneously with the release of US PPI numbers. The PPI index increased 2.4% year-over-year in October, beating the revised 1.9% of September and more than the market’s expectations of 2.3%. Meanwhile, the Core PPI for the month rose 3.1% YoY from 3.0% expectation, which eliminates food and energy prices. Although the data showed inflationary pressures were on the rise, which would play into the hands of the USD in the long run, the immediate reaction was tame because attention shifted to Powell’s more dovish talk over interest rates.The convergence of these factors saw DXY pull back, falling to around 106.80 at time of writing, providing some respite to the Euro and pushing EUR/USD higher from recent lows. EUR/USD Daily Chart Source: TradingView, by Richard Miles ECB in a Catch 22 Situation: How to Cut Rates while Tackling Inflation Though the Euro has gained a few percent against the US Dollar, European Central Bank ECB is now caught between the politics of rate cuts, and home-grown inflationary concerns. Home-grown inflationary pressures-the central issue for ECB officials-arise from the boost in wages. ECB is emphasizing more on cutting of interest rates. Showing an increased receptivity to cut rates, the central bank at the monetary policy meeting in October signaled that it was indeed turning its ears to the calls of the reducing economy. This news marks a change in tone especially since the growth fell way slower than expected, and equally, inflation data in the Eurozone remains weak. For Isabel Schnabel, an ECB board member, interest rates remain the prime instrument for policy changes but the secondary adding instruments are buys on bonds and forward guidance. While the ECB is paying increasing attention to cuts in rates, it has been quite cautious in taking concrete steps for some time now because the inflationary pressures continue unabated in the Eurozone. With hard-striving increases in wages coupled with the growth in labor productivity lagging behind, the raised fears of a wage-price spiral – where the increase in wages leads to higher prices that trigger even more wage increase in a spiral ride – belie this potential outcome working adversely for the ECB’s desired goal of putting inflation back on track. ECB Cautious on Inflationary Pressures The ECB is more sensitive to the realization that an early policy response, in this case, even some rate cuts, will mean high inflationary pressures. The central bank has thus indicated a need for more data before doing significant policy changes. The situation remains fluid, and the ECB is likely to continue monitoring the economic and inflationary landscape very carefully before making its next move. Meanwhile, the Eurozone is likely to continue struggling to find elusive momentum in growth. Most analysts think it will slow down in 2025. Cut in rates by the ECB would weaken the Euro further though the timing and full quantum of cut are still unclear. Key Economic Data to Watch The movements of the EUR/USD pair are likely to be sensitive to these upcoming data releases, especially from both the US and the Eurozone. Here are some of the key economic events and indicators to monitor in the coming days: US Economic Data US Retail Sales (October): Details about US retail sales may help explain the soundness of the US consumer-the very pulse of the whole economy. Better-than-expected retail sales can also be an additional strength for the US dollar if it translates to continued demand despite higher inflation. US CPI (Consumer Price Index): The main ‘event’ in the Dollar’s line-up will be the release of the US CPI report. In case inflation remains at these levels or even increases further, then this might lead to ideas about the Fed rate policy turnaround and hence a boost for the USD. Eurozone Economic Data Eurozone GDP Growth (Q3): The GDP data for the Eurozone will say much about its general health. Weaker growth than expected would only raise more concerns regarding the Euro outlook, while stronger growth could support the Euro in the short term.Eurozone CPI (Oct): Eurozone inflation

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