NZD/USD remains under pressure as trade tensions and Fed outlook weigh
NZD/USD struggles below key resistance amid weak momentum
The New Zealand Dollar (NZD/USD) continues to trade within a narrow range, currently hovering around $0.5650 after breaking its three-day losing streak. However, bearish sentiment remains dominant, as the pair struggles to gain upward momentum.
The 14-day Relative Strength Index (RSI) remains below 50, reinforcing downside risks, while the nine-day Exponential Moving Average (EMA) at 0.5654 acts as an immediate resistance level.According to analysts at UOB Group, downward momentum has increased, with the pair expected to drift toward 0.5625 in the near term. A broader range of 0.5595 to 0.5720 is anticipated, suggesting a lack of strong directional bias. The ongoing U.S.-China trade war has exacerbated volatility in the Kiwi, limiting its upside potential.
NZD/USD price dynamics (Sep 2024 - Feb 2025) Source: TradingView.
Key support and resistance levels
On the downside, 0.5650 remains a critical level. A clear break below this threshold could lead to further weakness toward 0.5550, followed by the 0.5516 low from October 2022. In contrast, a break above the nine-day EMA at 0.5654 could support a recovery toward the 0.5794 high from January 24.
The psychological resistance at 0.5800 and the upper boundary of the rectangle at 0.5810 remain key hurdles for any sustained bullish momentum.
Fed-RBNZ divergence pressures on the Kiwi
The U.S. Federal Reserve’s hawkish stance continues to support the U.S. dollar, weighing on the Kiwi. The latest U.S. nonfarm payroll report and rising inflation concerns have dampened expectations for a Fed rate cut, with a Reuters survey indicating that the first-rate cut might not come until June. This contrasts with expectations for the Reserve Bank of New Zealand (RBNZ) to continue easing, further weakening NZD/USD.
On the basis of previously analyzed charts, NZD/USD remains bearish, with a downward bias toward 0.5625 unless it breaks decisively above 0.5654. Market participants are closely watching upcoming U.S. inflation data and any developments in trade relations for further direction.
