NZD/USD price rebounds after RBNZ rate cut and Orr’s cautious guidance
NZD/USD rebounds as RBNZ signals gradual easing, holding support near 0.5700
The New Zealand dollar (NZD/USD) climbed above 0.57 on Wednesday, recovering from earlier losses after the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 50 basis points to 3.75%, as widely expected. Despite the rate cut, RBNZ Governor Adrian Orr signaled a gradual approach to further easing, easing fears of aggressive monetary policy loosening.
Initially, the NZD/USD pair dropped following the RBNZ’s announcement, but it rebounded as Orr indicated that future rate cuts might be smaller and the end of the easing cycle is approaching. The central bank hinted at two 25-bps rate cuts in April and May, bringing the OCR closer to the neutral rate, estimated at 3.0% in the long run.
Despite the rate cut, moderating inflation and spare economic capacity have prompted the RBNZ to support economic growth, with policymakers closely monitoring upcoming economic data.
NZD/USD price dynamics (Dec 2024 - Feb 2025) Source: TradingView.
Technical outlook: Key support and resistance levels
The NZD/USD pair is currently trading around 0.5710, holding above the nine-day EMA at 0.5695 and the 14-day EMA at 0.5685, indicating short-term bullish momentum. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing an upward bias.
To the upside, the next resistance stands at 0.5790, aligning with the upper boundary of the ascending channel. If NZD/USD surpasses 0.5794, it could test the two-month-high set on January 24.
On the downside, support is seen at 0.5650, which marks the lower boundary of the ascending channel. A break below this level could shift sentiment to bearish, leading to further declines toward 0.5516, its lowest point since October 2022.
Outlook: Traders await further guidance
With the RBNZ signaling a measured approach to rate cuts, traders will closely watch economic indicators and future policy statements for clues on the central bank’s stance. While the Kiwi dollar remains vulnerable to global risk sentiment, any hawkish signals from the Federal Reserve could cap further gains in NZD/USD.
Last week, NZD/USD was expected to find support near 0.565, with an ascending channel suggesting further upside potential. The current move aligns with that outlook, with resistance at 0.5790 remaining a key test for bulls.
