14 Feb 2025

The NZD/USD pair has reached a new high not seen in over two weeks, approaching the 0.5700 mark, largely due to the weakening of the US Dollar. The positive sentiment in the market, following the postponement of Trump's reciprocal tariff initiatives, has reduced the demand for the USD as a safe-haven asset. Additionally, the Reserve Bank of New Zealand (RBNZ) is anticipated to lower its Official Cash Rate (OCR) by 50 basis points to 3.75% during the upcoming Wednesday meeting.

The NZD/USD pair has reached a new high not seen in over two weeks, hovering around 0.5700. The New Zealand Dollar strengthens as the US Dollar (USD) lags behind its counterparts in a positive market environment. The appetite for risk-sensitive assets has surged as concerns regarding an imminent global trade conflict have diminished.

On Thursday, President Donald Trump of the United States did not provide a comprehensive plan for reciprocal tariffs and instructed his team to develop one. Nevertheless, market participants were expecting the announcement of reciprocal tariffs following Trump's tweet on his Truth Social account, which stated, "Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!" This tweet was made during the early hours of North American trading on Thursday.

The unexpected postponement of Trump's reciprocal tariff plan has reduced the safe-haven appeal of the USD. The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, is approaching a nearly four-week low around 106.80.

Investors are currently anticipating the Reserve Bank of New Zealand's (RBNZ) inaugural monetary policy meeting of the year, which is set to take place on Wednesday. Market participants expect the RBNZ to maintain its current pace of monetary easing at 50 basis points (bps). Such an outcome would likely be detrimental to the New Zealand Dollar (NZD).

The NZD/USD has shown a robust rebound from the support level around 0.5500 on a weekly chart. Nevertheless, the overall outlook for the Kiwi pair remains bearish, as indicated by the downward slope of the 20-week Exponential Moving Average (EMA) situated near 0.5777.

The 14-week Relative Strength Index (RSI) is attempting to re-enter the 40.00-60.00 range. Should the RSI fail to achieve this, it may trigger a new bearish momentum.

If the Kiwi pair falls below the 13-year low of 0.5470, it could potentially decline towards significant support levels at 0.5400 and 0.5300.

Conversely, a decisive breakout above the November 29 high of 0.5930 could propel the pair towards the November 15 high of 0.5970 and the psychological resistance level of 0.6000.