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Currencies NZD/USD

NZD/USD Under Pressure as US-China Trade Tensions Flare and US Dollar Strengthens in Advance of Important US GDP Release

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  • May 29, 2025
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NZD/USD currency pair declined to close to 0.5935 in early Asian trading on Thursday under pressure from a stronger US Dollar as well as strengthened US-China trade tensions. The suspension of vital technology sales to China by the Trump administration, as well as strengthened restrictions by China on mineral exports, has increased fears of supply chain disruptions. In the meantime, the Reserve Bank of New Zealand’s 25-basis-point rate reduction last week was partially defused by hints that easing is coming to an end. Contributing to volatility, a US federal court halted Trump’s sweeping “Liberation Day” tariffs, further bolstering the US Dollar. Market participants now look to the US Q1 GDP preliminary reading, which can greatly impact the pair’s short-term direction. KEY LOOKOUTS • Any intensification or relaxation of trade tensions between the US and China would have a major influence on NZD/USD, as New Zealand has a significant trade relationship with China. • The first release of US GDP figures will also be watched closely. A softer-than-anticipated reading can soften the US Dollar and see support for the Kiwi. •   Expectations of future Reserve Bank of New Zealand rate cuts remain subdued. Any shifts in RBNZ tone or policy signals may affect NZD/USD sentiment. •  General strength or weakness of the US Dollar, dependent on items like court decisions regarding tariffs and overall economy data, will remain a fundamental driver for the currency pair. Market players will be paying close attention to a number of factors influencing the near-term direction of NZD/USD. Excluding tensions between the US and China are a key risk, as further escalation may bear down on the New Zealand dollar owing to its trade dependence on China. Another key event is the US Q1 GDP preliminary figure, with the release potentially weakening the US Dollar and providing respite to the Kiwi if softer than anticipated. In turn, the Reserve Bank of New Zealand’s conservative approach to further rate reductions implies muted downside from monetary policy, but any change in tone would be able to rapidly influence market sentiment. Lastly, the overall resilience of the US Dollar, driven by legal updates regarding tariffs and economic prints, will remain a significant driver for the direction of the pair. NZD/USD also involve the ongoing US-China trade tensions, which can put pressure on the Kiwi because of New Zealand’s close relationship with China. Market participants are also concerned about the upcoming US Q1 GDP release as weaker-than-expected data can weaken the US Dollar and favor NZD/USD. Moreover, any changes in the RBNZ’s monetary policy expectations and overall US Dollar strength will be key considerations. •  Silver is also fluctuating around the nine-day EMA at around $33.10 and serves as a near-term support. • NZD/USD sagged to around 0.5935 against a stronger US Dollar and escalating US-China trade tensions. • The Trump administration halted US sales of key US technologies to China as a counter-measure to China’s export curbs on minerals. •  New Zealand’s proximity of trade with China exposes the Kiwi to worsening US-China relations. •  The Reserve Bank of New Zealand lowered its Official Cash Rate by 25 basis points to 3.25%, but suggested easing may be approaching its conclusion. •  Market expectations of another RBNZ rate cut in July have considerably decreased. • A US federal court stopped Trump’s sweeping “Liberation Day” tariffs, which strengthened the US Dollar. • Traders look for the US Q1 preliminary GDP figures, which can shape the US Dollar and NZD/USD trend. Escalating tensions between the United States and China have brought uncertainly to New Zealand’s currency, as the nation has strong trade links with China. The recent move by the US government to limit the sale of key technologies to China is in retaliation to China imposing its own export restrictions on vital minerals. This tit-for-tat has made people uncertain about the security of global supply chains and subjected markets tied to both economies to stress. NZD/USD DAILY PRICE CHART CHART SOURCE: TradingView Concurrently, the Reserve Bank of New Zealand recently cut its official interest rate but signaled that more cuts may not be soon in the offing, which has somewhat comforted investors. On the American side, a federal court temporarily suspended sweeping tariffs drafted by the Trump administration, causing the US Dollar to rally. Going forward, investors are on the lookout for releases of crucial US economic statistics that would determine the direction of both currencies in the weeks ahead. TECHNICAL ANALYSIS NZD/USD is facing resistance around the 0.5950 level, where sell pressure has developed, curbing upside strength. The pair’s recent slide towards 0.5935 indicates bearish sentiment building support from a stronger US Dollar. Important support levels to pay attention to are around 0.5900, a breach below which could see the downward move gain momentum. To change the short-term attitude back in favor of the upside, a bounce above 0.5950 would be necessary. Market players will also be keeping a close eye on moving averages and momentum indicators for guidance on the pair’s next move. FORECAST NZD/USD currency pair is able to stay above crucial support levels and the US economic data, especially the soon-to-be-released GDP report, arrives weaker than anticipated, the Kiwi may get some reprieve. Weaker US Dollar due to weak US growth figures would tend to lift demand for the New Zealand currency. Also, any indication that the Reserve Bank of New Zealand is approaching the end of its rate-cut cycle would enhance market conviction in the Kiwi to drive a possible rally above resistance levels near 0.5950. On the bearish side, further aggravation of US-China trade tensions could prove significantly bearish for NZD/USD, considering New Zealand’s economic links with China. Additional constraints or retaliatory actions might depress investor sentiment and place bearish pressure on the Kiwi. Additionally, if the US GDP figure comes in stronger than expected or the US Dollar is generally strong as a result of positive economic news or legal decisions, the NZD/USD exchange rate might come up against lower support levels around

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Currencies NZD/USD

NZD/USD Moves Above 0.6000 Despite Rate Cut Speculation as US Dollar Lags Due to Debt Fears

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  • May 26, 2025
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NZD/USD currency pair jumped above 0.6000, hitting new six-month highs around 0.6030 in Asian trading on Monday, even as rate cut speculation by the Reserve Bank of New Zealand (RBNZ) picks up. The New Zealand dollar strength is being witnessed against the backdrop of ongoing US Dollar weakness due to increasing concerns over the US fiscal deficit. The Congressional Budget Office (CBO) cautioned that the “One Big Beautiful Bill” proposed by former President Trump would increase the deficit by $3.8 billion via tax loopholes, putting additional pressure on US bond yields and economic prospects. Half of NZIER’s Shadow Board members meanwhile suggest a 25 basis-point OCR cut in the next RBNZ decision, mirroring the nation’s lackluster inflation and weak growth. KEY LOOKOUTS •Markets are keenly observing if the RBNZ will act on NZIER’s suggestion of $25 basis-point rate cut in view of low inflation and sluggish economic growth. •The fate of Trump’s “One Big Beautiful Bill” in the Senate might have a big bearing on the US Dollar, particularly if the estimated $3.8 billion increase in the deficit comes to pass. •Itching US bond yields could continue to prop up borrowing costs, heightening economic uncertainty and affecting currency flows. •Sustained weakness in the US Dollar, underpinned by debt issues, could assist NZD/USD in the near term, particularly if risk appetite remains positive. Investors will need to watch the Reserve Bank of New Zealand’s (RBNZ) Monetary Policy announcement on Wednesday closely, as markets expect a potential 25 basis-point rate reduction in the face of muted inflation and slow growth. Meanwhile, events in regard to ex-President Trump’s suggested “One Big Beautiful Bill” could continue to take a toll on the US Dollar, particularly if the projected $3.8 billion rise in the fiscal deficit actually happens. Increasing US bond yields, driven by deficit worries, may also maintain pressure on the US economy by perpetuating elevated borrowing costs. In summary, NZD/USD is still responsive to changes in monetary policy expectations and investor sentiment risk, which will be major drivers in the near term. The markets are waiting for the RBNZ’s rate decision, with a majority of people expecting a 25 basis-point reduction with dismal growth. In the meantime, US Dollar weakness is sustained by Trump’s proposed bill due to raised deficit concerns, keeping NZD/USD underpinned at six-month highs. •  NZD/USD broke the 0.6000 barrier, reaching a six-month high of about 0.6030 during Asian trading on Monday. •  The New Zealand Dollar firmed even as speculation for an RBNZ rate reduction this week increased. •  Fifty percent of NZIER’s Shadow Board suggested a 25 basis-point cut in OCR, while others proposed a bigger cut or no change. • US Dollar weakness persists amid increasing fears about the US fiscal deficit and economic prospects. • Trump’s suggested “One Big Beautiful Bill” would cost the US $3.8 billion in additional deficit, predicts the Congressional Budget Office (CBO). • Higher US bond yields fueled by deficit worries may prolong high borrowing costs, injecting economic uncertainty. • Short-term market sentiment continues to favor NZD/USD as investors wait for significant monetary policy announcements. New Zealand Dollar continues to strengthen with the Reserve Bank of New Zealand’s (RBNZ) forthcoming monetary policy announcement pending. Though certain members of NZIER’s Shadow Board have suggested a rate cut, broader market sentiment and external influences continue to support the NZD. The RBNZ has a difficult call to make as it weighs low inflation with persisting fears of the nation’s lackluster economic growth. While a cut in the rate is an option, the central bank can also opt to stay on the sidelines amid worldwide uncertainties. NZD/USD DAILY PRICE CHART CHART SOURCE: TradingView Meanwhile, the US Dollar comes under pressure as worries over the nation’s expanding fiscal deficit grow. And former President Donald Trump’s suggested “One Big Beautiful Bill” has come under scrutiny, with the Congressional Budget Office estimating it would increase the national deficit by $3.8 billion. The bill, which contains tax reductions for tipped employees and automobile purchasers, has raised concerns about long-term budgetary pressure. These events are creating uncertainty in US economic prospects, which is affecting global currency flows and favoring stronger performance from such currencies as the NZD. TECHNICAL ANALYSIS NZD/USD has pierced the important psychological resistance level of 0.6000, which points to positive momentum. The pair is around 0.6030, its highest in six months, which suggests ongoing buying interest. If this rally continues, the next resistance area could be around 0.6060–0.6080. On the negative side, there is immediate support at 0.5970, with further support at 0.5930. Momentum oscillators like RSI are still in bullish territory, which confirms the optimistic short-term view unless there is a drastic reversal in sentiment after the policy decision by the RBNZ. FORECAST If the Reserve Bank of New Zealand takes a cautious tone or postpones a cut in rates, then the NZD can continue with its bullish trend, taking NZD/USD higher. Further fall in the US Dollar, fueled by fiscal uncertainty and deteriorating sentiment surrounding the US economy, can also help the pair to gain further. If these conditions continue, the pair may test resistance levels around 0.6060 and even move towards 0.6100 in the near future. Improved market sentiment or better-than-expected New Zealand economic data would help the bullish argument further. Conversely, if the RBNZ announces a bigger-than-expected rate cut of more than 25 basis points or a more dovish easing tone, the NZD can become vulnerable. A reversal in the US Dollar, perhaps on the back of better risk appetite or better US economic readings, can also negatively impact the pair. In that case, NZD/USD may come under bear pressure, with early support around 0.5970 and further decline potentially pushing it towards 0.5930 or below. Traders need to keep an eye on changes in global risk sentiment, which has the potential to change the pair’s direction in no time.

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