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The NZD/USD pair has now seemingly ended a three-day winning streak after rebounding to the 0.6020-0.6025 area, or more than two-week highs, during the Asian session. The spot price slipped below the 0.6000 psychological mark, hitting a new daily low in the past hour on a combination of negative factors.
Global risk sentiment received a strong boost following the announcement of trade talks between the United States and China in Switzerland this week. In addition, slightly better-than-expected labor market statistics from New Zealand showed that the unemployment rate remained at 5.1% in the first quarter of 2025, compared to the expected slight increase, providing modest support to the NZD/USD pair.
Additional details showed that the number of employed people rose by 0.1% after falling by 0.2% in the previous quarter. However, the initial market reaction seems to be short-lived, as the small increase in employment and continued slowdown in wage growth leave room for the Reserve Bank of New Zealand (RBNZ) to further cut interest rates, possibly to 2.75% by the end of the year.
This expectation was further confirmed in the RBNZ’s latest Financial Stability Report, which highlighted that trade turbulence has increased downside risks to domestic economic growth. Apart from this, a small US dollar (USD) rebound has exerted some downward pressure on the NZD/USD pair. However, USD bulls may choose to wait for the outcome of the two-day FOMC meeting.
The Federal Reserve (Fed) is scheduled to announce its decision later this Wednesday, and the market focus will be on the accompanying policy statement. In addition, Chairman Powell’s speech at the post-meeting press conference will be closely watched for clues on the path of rate cuts. This in turn will affect the demand for the US dollar and provide new impetus to the NZD/USD pair.
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