The NZD/USD pair struggles to sustain its recovery from the 0.5720 region, facing renewed selling pressure during Friday’s Asian session. Trading around the mid-0.5700s, the pair remains on a three-day losing streak as the US dollar (USD) regains strength.
USD Gains Support from Fed Policy and Geopolitical Uncertainty
The US dollar continues to recover from its recent multi-month lows, supported by the Federal Reserve’s stance on interest rates. The Fed maintained its forecast for only two 25 basis point rate cuts by year-end, reinforcing support for the Greenback. Fed Chair Jerome Powell also noted that progress toward the inflation target could slow due to retaliatory tariffs from other nations.
Additionally, heightened geopolitical risks—including ongoing conflicts in the Middle East and the prolonged Russia-Ukraine war—have boosted demand for the safe-haven USD, adding to the downward pressure on NZD/USD.
NZD Outlook Bolstered by China’s Stimulus Measures
Despite the Kiwi dollar’s struggles, optimism surrounding China’s recent stimulus measures offers some support to antipodean currencies, including the New Zealand dollar (NZD). Furthermore, expectations that the Fed may resume its rate-cutting cycle sooner than anticipated—due to concerns over a tariff-driven economic slowdown—could limit USD gains and provide some stability to the NZD/USD pair.
Market Caution Ahead of Key Data
With no major US economic data releases scheduled, market participants remain cautious. The fundamental backdrop suggests that while NZD/USD remains under pressure, a strong follow-through selling move is needed before confirming a reversal of the pair’s uptrend that began earlier this month.
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