The NZD/USD is trading around 0.5900, facing pressure amid cautious sentiment and mixed economic signals. Despite weaker-than-expected US inflation and retail sales data, Federal Reserve Chair Jerome Powell’s comments supported the US Dollar.

US data showed the Producer Price Index rising 2.4% in April, below the expected 2.5%. Retail Sales increased by 0.1%, missing market hopes. These results fuel speculation about potential Federal Reserve rate easing in 2025. Powell emphasised revisiting policy frameworks due to persistent supply shocks, supporting the US Dollar’s stability.

New Zealand Economic Conditions

In New Zealand, fiscal announcements had minimal impact on the NZD. Finance Minister Nicola Willis announced a NZ$190 million social investment fund, aimed at improving outcomes for vulnerable groups. However, market focus shifts to the upcoming Business NZ Performance of Manufacturing Index and RBNZ inflation expectations survey, which may influence future rate decisions by the Reserve Bank of New Zealand.

Technically, NZD/USD remains bearish, moving between 0.5860 and 0.5916. The Relative Strength Index and MACD indicate weak momentum. Neutral signals from Stochastic %K, CCI, and Bull Bear Power suggest limited rebound potential. Short-term indicators reinforce downside pressure while only the 100-day SMA offers slight support. Key support levels are 0.5860, 0.5846, and 0.5829, with resistance at 0.5878, 0.5883, and 0.5884.

The current pricing of NZD/USD near the 0.5900 region reflects softness in the Kiwi, as limited market enthusiasm and international uncertainties weigh on demand. This pressure comes despite softer-than-projected US inflation and a lacklustre rise in retail sales, which at first glance might have been expected to undermine the greenback. Yet, these data points failed to dent the US Dollar’s footing, largely because Powell’s remarks calmed any assumptions of an abrupt shift towards policy easing.

Market Reactions and Implications

By highlighting that the Federal Reserve must adapt its economic models due to supply-side disruptions, Powell effectively communicated a cautious tone around future rate adjustments—less about cutting soon and more about watching persistent inflation risks. That stance, even with mild data misses, was more than enough to halt any US Dollar losses for now. For those active in currency contracts and directional positions, this could set the tone heading into summer, especially as the market wrestles with timing around the first potential rate cut.

In contrast, across the Tasman, New Zealand’s attempts to stimulate domestic policy sentiment through targeted fiscal pledges didn’t amount to much in the FX world. Willis’s announcement of targeted investment in vulnerable sectors may offer long-term structural changes, but the currency market paid little attention. What will draw more serious reactions, however, is due shortly — the release of the Business NZ Manufacturing Index and the Reserve Bank’s inflation expectations. These will likely serve as firmer indicators for potential adjustment paths in monetary policy from the RBNZ.

From a technical stance, the pair remains capped by well-defined resistance levels, with the high end sitting just shy of 0.5920. The ongoing trading band between 0.5860 and 0.5916 underscores sideways action with a negative skew. On the charts, indicators aren’t pointing to a breakout. The RSI hovers near oversold without any clear divergence. The MACD remains under the signal line, while oscillators such as the Stochastic %K and CCI suggest a lack of conviction — neither buyers nor sellers appear ready to take control.

The 100-day simple moving average still offers a bit of a cushion, yet momentum overall leans lower. Price action down to 0.5846 or even 0.5829 shouldn’t be discounted if sentiment doesn’t improve. Conversely, any attempt at recovery sees resistance lined up tightly between 0.5878 and 0.5884. Those levels need to be cleared convincingly for a rethink of the current bias.

In short, the US is holding firm on its wait-and-see approach around future rate cuts, despite softness in consumer activity. Meanwhile, the NZ side looks to data this week for a potential pivot, though early signals suggest mechanical trading remains favoured — short or flat positioning still dominates. You can feel how macro cues and technical momentum parse decisions in tandem; it’s not calculated impulse, it’s strategic hesitation.

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