NZD/USD eased from near 0.6000 after the RBNZ held rates last week and kept a dovish stance. The bank signalled policy would stay accommodative for some time, and that a rate rise later in 2026 is possible but not fully priced in.
Markets cut expectations for tightening, with only one hike now favoured by year-end, down from two before the decision. A September move is now priced at a 40% probability.
Us Tariff Policy Shift
In the US, the Supreme Court’s 6–3 ruling struck down the administration’s IEEPA tariffs on Friday. Trump then threatened a new 15% global tariff under Section 122 of the Trade Act, to take effect in the coming months.
Section 122 would carry a 150-day statutory limit, and more than $160 billion in importer refunds are possible. This comes as Fed speakers lead Tuesday’s US events, while Australian CPI on Wednesday may affect Kiwi crosses.
On Monday, NZD/USD fell 0.34%, dipped below 0.5960, then bounced towards 0.6000 after an earlier rise faded. It remains above the 50-day EMA at 0.5915 and the 200-day EMA at 0.5860, with the November low near 0.5600 still the base of the broader uptrend.
The Stochastic Oscillator has turned lower through the midpoint after the year-to-date high of 0.6094. Support is at 0.5956 and 0.5900, while resistance is at 0.6000 and 0.6094, with 0.6200 above.
The Reserve Bank of New Zealand’s dovish stance is creating headwinds for the Kiwi, especially after last week’s decision to hold rates. Recent data showing New Zealand’s Q4 2025 GDP was a weaker-than-expected 0.2% further justifies the central bank’s cautious outlook. This reduces the incentive to hold the New Zealand dollar against the greenback.
Risks To Nzd Outlook
At the same time, the renewed trade uncertainty from the US is a major concern for risk-sensitive currencies like ours. The threat of new global tariffs has already caused the VIX, a key measure of market fear, to jump over 15% and trade near a three-month high of 18.5. This kind of environment typically leads investors to seek the safety of the US dollar.
We are also watching for weakness from New Zealand’s key trading partners, which could worsen the outlook. China’s latest manufacturing PMI for January 2026 dipped back into contraction territory at 49.8, while the Global Dairy Trade price index fell 2.1% in its most recent auction. These factors point to potentially lower export revenues ahead.
Given the conflicting signals, we see value in using options to position for potential downside while managing risk from the choppy price action. While the pair is holding above the 50-day moving average near 0.5915, the fundamental picture suggests this support may be tested soon. Purchasing put options with a strike below 0.5950 could be a prudent way to trade a potential breakdown.
This situation feels similar to the trade disputes we saw back in 2018 and 2019 from the perspective of 2025. During that period, similar tariff uncertainty caused the NZD/USD to fall more than 10% over several months. We should be prepared for a similar increase in volatility in the weeks ahead.
