NZD/USD Surges Above 0.5550 Amid Hopes of Easing Global Trade Tensions
The NZD/USD pair is trading near 0.5560 in Wednesday’s European session, recovering after three straight days of losses. The rebound comes as US President Donald Trump hinted at potential trade negotiations, easing fears of further escalation in global trade tensions.
However, the New Zealand Dollar (NZD) remains vulnerable due to new US tariffs, including a massive 104% duty on Chinese imports, which took effect today. Given China’s status as New Zealand’s largest trading partner, these tariffs could indirectly pressure the NZD if Beijing retaliates.
Why Is NZD/USD Rising?
- Trade War De-escalation Hopes – Trump’s openness to talks has boosted risk sentiment.
- Fed Rate Cut Expectations – Markets now fully price in a 25 bps cut by May, supporting risk assets.
- Technical Rebound – After three days of declines, a short-term bounce was expected.
RBNZ Cuts Rates Amid Economic Slowdown
The Reserve Bank of New Zealand (RBNZ) delivered a 25 bps rate cut, citing:
- Weakening inflation
- Slowing economic growth
- Early signs of labor market softening
Will the RBNZ Cut Rates Again?
If trade tensions worsen, the RBNZ may opt for a 50 bps cut later this year. Markets are already pricing in up to 100 bps in additional easing by 2025, which could limit NZD upside.
US Fed Rate Cut Expectations Grow
Chicago Fed President Austan Goolsbee reiterated a data-dependent approach, but traders are betting on:
- 25 bps cut by May (fully priced in)
- Additional cuts by July (base case)
- Over 100 bps in total cuts by end-2025
A dovish Fed typically weakens the US Dollar (USD), supporting NZD/USD gains.
Technical Analysis: NZD/USD Outlook
Key Levels to Watch:
- Support: 0.5500 (psychological level), 0.5480 (recent low)
- Resistance: 0.5580 (immediate hurdle), 0.5620 (50-day MA)
Short-term bias: Neutral-to-bullish if trade optimism persists.
Long-term risks: Downside if US-China tensions escalate further.
Conclusion: Will NZD/USD Continue Rising?
The NZD/USD recovery hinges on:
✅ Progress in US-China trade talks
✅ Fed rate cut timing
✅ RBNZ’s next policy moves
If trade tensions ease further, NZD/USD could test 0.5600. However, new tariffs and RBNZ dovishness may cap gains.