NZD/USD price holds firm amid U.S. dollar correction as traders eye key economic data
NZD/USD holds near 0.5670 as traders await US ISM Services PMI and Fed minutes
The New Zealand dollar (NZD) maintained its upward trajectory on Tuesday, with the NZD/USD pair trading near 0.5670 during early European hours. The pair’s movement reflects a softer US dollar, which remains under pressure ahead of the release of the US ISM Services Purchasing Managers Index (PMI) and the Federal Reserve's December policy meeting minutes set for later in the week.
Additionally, while the NZD is benefiting from robust external data, speculation about potential monetary easing by the Reserve Bank of New Zealand (RBNZ) could limit its upside. The RBNZ is expected to cut its cash rate by 50 basis points during its upcoming February meeting, potentially weighing on the Kiwi’s strength.
NZD/USD price movement (Nov 2024 - Jan 2025) Source: TradingView.
Key drivers behind NZD/USD's performance
The NZD/USD’s recent gains were supported by a favorable Caixin Services PMI for China, a key trading partner for New Zealand. The index rose to 52.2 in December 2024, marking its highest level since May and surpassing the market’s expectations of 51.7. This stronger-than-anticipated performance in China’s service sector bolstered investor confidence in the Kiwi dollar.
Conversely, the US dollar showed signs of resilience after President-elect Donald Trump reaffirmed that his tariff policy would not be scaled back, dismissing speculation about narrowing the scope of import tariffs. This declaration briefly cushioned the Greenback’s decline, although it did not fully offset the market’s cautious sentiment ahead of key economic releases.
Market sentiment and technical insights
Despite the positive outlook, analysts from UOB Group highlighted that the NZD/USD pair may enter a consolidation phase, with anticipated movement within a 0.5590–0.5705 range in the near term. Monday’s price action saw the pair fluctuate between 0.5612 and 0.5685, reflecting a lack of clear directional momentum.
Looking ahead, market participants will closely monitor the US ISM Services PMI and Fed meeting minutes for further indications of economic resilience and potential shifts in monetary policy.
In our previous analysis, we highlighted how the Caixin Services PMI boost helped NZD/USD maintain levels above 0.5600 despite ongoing tariff concerns. This update aligns with previous trends and signals ongoing market sensitivity to global policy shifts.
