NZD/USD price forecast: Bullish momentum intact despite 50 bps rate cut
NZD/USD price action turned volatile
NZD/USD price action turned volatile on Wednesday after the Reserve Bank of New Zealand (RBNZ) delivered a larger-than-expected 50 basis point rate cut, bringing the Official Cash Rate (OCR) down from 4.25% to 3.75%.
The initial reaction saw the pair drop below the 0.5700 psychological level, but a rebound from 0.5680 pushed prices higher to 0.5730 in the European session. However, gains were later trimmed, with NZD/USD retreating to 0.5710 in the North American session.
Despite initial weakness, NZD/USD has maintained an overall bullish trend throughout February. The 0.5680 support zone remains key for buyers, while near-term resistance is seen at 0.5750. A break above this level could pave the way for further upside, reinforcing the broader uptrend.
NZD/USD price movement (Dec 2024 - Feb 2025) Source: TradingView.
RSI signals upside but expected rate cuts may cap NZD/USD long-term gains
From an indicator perspective, the Relative Strength Index (RSI) remains in bullish territory on the four-hour and daily charts, supporting the potential for further gains. Some analysts argue that the pair could strengthen further on technical momentum, particularly if global risk sentiment remains favorable. However, external risks loom, with concerns that potential trade tensions and tariffs under President Trump's administration could weigh on the currency.
Additionally, the RBNZ's policy outlook suggests the possibility of further rate cuts in 2025, which may limit long-term gains as the central bank remains focused on inflation stability and economic recovery.
While NZD/USD has shown resilience following the rate cut, the key level to watch is 0.5750. A break above this resistance could accelerate gains toward 0.5800, while failure to hold above 0.5680 may shift sentiment in favor of sellers.
NZD/USD fell to $0.571 as traders positioned for an expected RBNZ rate cut. The Kiwi retreated from a two-month-high, pressured by a stronger USD and rising Treasury yields.
