- NZD/USD is finding it difficult to sustain an intraday rally that briefly pushed it to its highest level in over two weeks.
- The impact of mixed New Zealand employment figures and a slight strengthening of the US Dollar are outweighing positive sentiment surrounding trade developments.
- Market participants are now keenly awaiting the Federal Open Market Committee (FOMC) decision before committing to new directional positions.
The NZD/USD pair is pulling back after an earlier surge during the Asian trading session to the 0.6020-0.6025 region, its highest point in more than two weeks. This upward momentum appears to have stalled, ending a three-day period of gains. The pair has since fallen below the crucial 0.6000 level, reaching a new daily low in recent trading, influenced by a confluence of adverse factors.
Global risk appetite received a significant boost following the announcement of upcoming trade discussions between the United States and China in Switzerland. Furthermore, New Zealand’s labor market data, which marginally exceeded expectations, contributed to the initial upward pressure on the NZD/USD. Specifically, the unemployment rate remained stable at 5.1% in the first quarter of 2025, defying forecasts that anticipated a slight increase. This positive data point initially supported the New Zealand Dollar.
Further analysis of the data indicated that the number of employed individuals increased by 0.1%, recovering from a 0.2% decline in the preceding quarter. However, the market’s initial positive response proved to be fleeting. The modest increase in employment, coupled with a persistent deceleration in wage growth, reinforces the possibility of further interest rate reductions by the Reserve Bank of New Zealand (RBNZ). Market forecasts suggest a potential rate cut to 2.75% by the end of the year, reflecting concerns about the pace of economic growth and inflationary pressures within New Zealand. The RBNZ’s monetary policy decisions will continue to be data-dependent, closely monitoring key economic indicators to guide its future actions. Furthermore, the strength of the US dollar is weighing on the pair, as investors await the FOMC decision. Any hawkish signals from the Fed could further pressure the NZD/USD.
