The New Zealand Dollar (NZD) is under pressure against the US Dollar (USD) after rallying to a six-month high near 0.6025 earlier on Wednesday. At the time of writing, the NZD/USD pair is trading just below the 0.6000 level, as a mix of cautious Federal Reserve policy signals and soft New Zealand wage growth weigh on bullish momentum.
The Federal Reserve kept its benchmark interest rate unchanged at 4.25%–4.50%, as widely expected, but its accompanying statement flagged heightened risks surrounding both inflation and unemployment. Chair Jerome Powell reinforced a “wait-and-see” stance, emphasizing the Fed’s data-dependent approach and warning that continued trade-related uncertainty could obstruct the central bank’s policy objectives.
This cautious tone, combined with ongoing quantitative tightening through balance sheet reduction, lent renewed strength to the US Dollar. The US Dollar Index (DXY) held firm around 99.50, reflecting broader market caution and limiting upside for risk-sensitive currencies like the NZD.
NZ Data Disappoints Despite Stable Unemployment Rate
Domestically, New Zealand’s Q1 employment report offered little support for the Kiwi. While the unemployment rate held steady at 5.1%, defying forecasts of a rise to 5.3%, wage growth came in softer than expected. The Labor Cost Index rose at a slower pace, undercutting expectations for inflationary wage pressures and reinforcing the case for further rate cuts from the Reserve Bank of New Zealand (RBNZ).
Markets are increasingly pricing in additional RBNZ easing over the coming months, which could limit NZD upside despite improving risk sentiment globally.
Technical Outlook: Near-Term Correction vs. Long-Term Bullish Bias
Technically, NZD/USD is showing early signs of a corrective phase. The pair faces initial support at 0.5930, with further downside levels at 0.5915 and 0.5886. On the upside, resistance lies at 0.5943, 0.5948, and 0.5952.
The Relative Strength Index (RSI) is neutral at 55.28, suggesting consolidation rather than trend exhaustion. However, the MACD indicator is flashing a bearish divergence, hinting at the potential for a near-term pullback. Still, broader momentum remains constructive, with the 100-day SMA at 0.5728 and the 200-day SMA at 0.5886 pointing to a sustained bullish bias.
Outlook: Mixed Signals, Data-Driven Path Ahead
The NZD/USD pair remains in a consolidation phase, caught between conflicting forces. Fed caution and soft local wage data suggest near-term downside risk, while improving trade sentiment and long-term technical structure still favor the bulls. Traders will be watching closely for further Fed commentary and upcoming New Zealand data to determine the pair’s next move.
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