Key Points:
- NZD/USD rose to 0.57441, extending its rally from Tuesday’s low of 0.57095.
- Tariff optimism supports risk appetite, but RBNZ signals rate cuts in April and May.
The New Zealand dollar extended its rebound on Wednesday, rising to $0.57441 against the U.S. dollar after touching a session high of 0.57478. This follows a low of 0.57095 on Tuesday. The rally builds on optimism that U.S. President Donald Trump may take a more measured approach to trade tariffs, after signalling that not all planned levies would be enforced on April 2.
Though Trump gave no concrete details, markets welcomed his suggestion that some industries may be exempt, improving sentiment for risk-sensitive currencies like the kiwi. Additional support came from S&P Global Ratings, which projected that New Zealand and other Asia-Pacific economies would face limited direct fallout from U.S. trade actions.
Rate Cuts Still in Play
Despite the recovery, the New Zealand dollar remains under pressure on the domestic front. The Reserve Bank of New Zealand (RBNZ) is expected to deliver two 25 basis point rate cuts in April and May, with a third cut potentially later in the year. The dovish stance reflects weaker inflation data, soft business sentiment, and growing caution over external demand.
These rate expectations are likely to cap medium-term gains for the kiwi, even as global risk appetite supports short-term upside.
Technical Analysis
The NZDUSD chart shows a fairly mixed performance over the past couple of sessions, with price ranging between 0.57095 and 0.57504. After a dip to the lower bound on March 25, the pair rebounded strongly into the close, breaking back above the 0.57400 mark. The MACD line recently crossed above the signal line, with green bars building up on the histogram—suggesting bullish momentum may be gathering.
Picture: NZDUSD eyes breakout above 0.57500 as bullish momentum resurfaces, as seen on the VT Markets app
Despite this upward swing, the pair is still struggling to cleanly breach the 0.57500 resistance zone, where price was rejected earlier. However, the alignment of the short-term moving averages and the positive MACD crossover could point toward another attempt at breaking higher if buying pressure holds.
Range-Bound with Upside Risk
While the near-term trend remains constructive, the broader backdrop of expected monetary easing by the RBNZ suggests gains could be limited beyond 0.5750 unless global sentiment improves further.
In the short term, traders may look for continued range-bound movement between 0.5710 and 0.5750, with breakout potential driven by U.S. trade policy updates or domestic inflation data surprises.
The kiwi will remain sensitive to any RBNZ commentary or shifts in Fed tone, making this a key week for directional clarity in the NZD/USD pair.
