USD/NZD Outlook: Bearish, pressured by its position below the 90-day average and near recent lows.
Key drivers:
- The Federal Reserve's cautious approach to rate cuts contrasts with the Reserve Bank of New Zealand's recent rate reduction, weakening the USD against the NZD.
- Global trade tensions are affecting New Zealand's export revenue, which could limit the NZD's rally potential in the current environment.
- The upcoming US labor market data could change market perspectives, especially regarding Fed easing expectations.
Range: The USD/NZD is likely to hold near current levels, as it trades close to recent lows within a stable range.
What could change it:
- Upside risk: Strong US labor market data leading to reduced Fed easing could support the USD.
- Downside risk: Further economic weakness in New Zealand or escalating trade tensions impacting the NZD could drive the rate lower.