NZD/USD holds steady near 0.6050 as momentum withers
- NZD/USD continues to cycle intraday levels near 0.6050.
- Kiwi traders are awaiting a meaningful shift in rate stances from the RBNZ or the Fed.
The New Zealand Dollar firmed to around 0.6057, its highest level in two weeks, as markets assessed the Reserve Bank of New Zealand's (RBNZ) policy outlook ahead of its February 18 Monetary Policy Statement. The RBNZ is widely expected to hold the Official Cash Rate (OCR) at 2.25% after cutting rates by a cumulative 325 basis points since August 2024. Labor market data released last week showed mixed results, with unemployment rising unexpectedly to 5.4% (a decade high) while employment growth of 0.5% beat the 0.3% forecast, reinforcing the view that a near-term rate hike is unlikely. Westpac expects the RBNZ to bring forward its projected first rate increase to December 2026, a modest shift from the earlier mid-2027 guidance. Markets currently assign a 75% probability to a rate hike by September.
On the US side, January Non-Farm Payrolls (NFP) surprised to the upside at 130K, pushing back Federal Reserve (Fed) rate cut expectations from June to July. The key event for the New Zealand Dollar on Friday is the delayed US Consumer Price Index (CPI) release for January, where economists expect headline CPI at 0.29% month-on-month and core CPI at 0.39% month-on-month. A tame inflation reading could fuel further US Dollar weakness and support the Kiwi into the RBNZ decision next week.
Bulls have long odds of breaking through 0.6100
On the daily chart, NZD/USD is trading near 0.6057, holding above the key psychological support at 0.6000 after bouncing from the 0.5937 low posted on February 6. The pair is attempting to reclaim ground above the 0.6050 level, which has acted as a pivot through early February. Resistance overhead sits at the late January high near 0.6100, a level the pair failed to breach in its most recent attempt, creating a potential double top formation on the 4H timeframe that bears are watching closely. The 50-day Simple Moving Average (SMA) is flattening near the 0.5950 area, while the 200-day SMA sits lower, suggesting the medium-term trend is still transitioning from the prolonged downtrend. The Relative Strength Index (RSI) on the daily chart reads near 55, pointing to neutral-to-slightly-bullish momentum without overbought conditions.
On the 1H timeframe, the pair is consolidating within a narrow range between 0.6030 and 0.6060, suggesting indecision ahead of Friday's CPI data. A sustained break above 0.6100 would signal a shift toward the 0.6120 to 0.6150 zone, while failure to hold 0.6000 could expose the 0.5950 support area and the 50-day SMA.
NZD/USD daily chart
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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