The NZD/USD pair extended Wednesday’s recovery from the 0.5735 region — its lowest level since April 11 — and gained positive traction during Thursday’s Asian session. Spot prices moved back above the 0.5800 handle, supported by mild US Dollar (USD) weakness, though further upside appears limited following the Reserve Bank of New Zealand’s (RBNZ) dovish policy shift.
Market sentiment remains cautious as expectations grow for additional rate cuts by the Federal Reserve (Fed). Meanwhile, concerns that an extended US government shutdown could weigh on economic activity are curbing the USD’s weekly gains.
Furthermore, the Israel–Hamas agreement on the first phase of a peace deal has lifted global risk appetite, pulling the safe-haven greenback away from Wednesday’s two-month highs. This improvement in sentiment is providing a modest tailwind for NZD/USD.
RBNZ rate cut limits bullish momentum
The RBNZ surprised markets by cutting the Official Cash Rate (OCR) by 50 basis points (bps), from 3.00% to 2.50%, exceeding expectations for a 25 bps reduction. The central bank also signaled readiness to ease further if needed to bring inflation sustainably toward its 2% midpoint target over the medium term. This dovish stance could discourage traders from making aggressive bullish bets on the New Zealand Dollar (NZD), thereby capping the pair’s upside.
Technical outlook and market focus
From a technical perspective, NZD/USD’s recent rejection from the 200-day Simple Moving Average (SMA) suggests lingering downside risk. Traders will closely monitor Fed Chair Jerome Powell’s upcoming comments during the North American session for fresh clues on the Fed’s rate-cut trajectory. In the absence of key US macroeconomic data—due to the ongoing government shutdown—Powell’s tone may provide the next directional cue for the pair.
