The NZD/USD pair extended its gains to around the 0.5845–0.5850 zone during early European trading on Wednesday, supported by renewed weakness in the US Dollar. The Greenback remains under pressure as markets continue to price in the possibility of further interest rate cuts by the US Federal Reserve. Later in the session, traders will closely watch the release of weekly US Initial Jobless Claims for additional direction.
Data published by the US Bureau of Economic Analysis on Tuesday showed that robust economic growth failed to alter expectations for looser monetary policy next year. The US economy expanded at an annualized rate of 4.3% in the third quarter, exceeding market forecasts of 3.3% and accelerating from the 3.8% growth recorded in the second quarter. Despite the strong headline figures, investor focus remains firmly on the Fed’s expected policy trajectory.
Political pressure raises Fed independence concerns
Adding to the downside pressure on the US Dollar, comments from US President Donald Trump have revived concerns about the Federal Reserve’s independence. Trump stated that he expects the Fed Chair to cut interest rates if the economy performs well, emphasizing that the next Fed Chair should strongly support significantly lower rates. He also suggested that candidates who disagree with his stance would not be considered for the role.
These remarks have unsettled investors and policymakers, increasing fears of political influence over monetary policy. Such concerns tend to undermine confidence in the US Dollar, providing additional support for NZD/USD.
Risk-off sentiment may cap upside
Despite the pair’s upward momentum, broader risk-off sentiment could limit further gains. Heightened geopolitical tensions have increased demand for traditional safe-haven assets, including the US Dollar. The US has intensified efforts to disrupt Venezuela’s crude oil exports, intercepting two Venezuelan oil tankers in the Caribbean and warning that additional sanctioned vessels could be seized.
This escalation adds to global uncertainty and may offer some support to the Greenback, potentially tempering NZD/USD upside in the near term. As a result, price action is likely to remain sensitive to shifts in risk sentiment and incoming US economic data.
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