NZD/USD eyes fifth straight day of gains, looks to come up for air

The kiwi has been quietly an outperformer in the past week, even against the likes of the euro and yen. In the case of NZD/USD, the dollar’s struggles is only compounding the upside move over the last few days. And that is leading to potentially a key technical break as seen above.

The pair had been somewhat consolidating to start the year, before testing the February low in a dip earlier this month. That came amid the initial fears from Trump’s reciprocal tariffs before a strong bounce from last week that is extending to today.

The jump above 0.5900 now sees buyers looking to come up for air in a push above its 200-day moving average (blue line).

The 29 November high from last year at 0.5928 might offer some minor resistance but the pair looks to be angling towards a push to 0.6000 next.

I’m sympathetic to the reasoning that the kiwi is more bid due to flows in AUD/NZD. The pair has seen a decline from 1.0900 to test 1.0700 in the past few days. One key reason for that is perhaps traders stepping up steeper rate cut bets by the RBA.

While the RBNZ is still on an easing path, market bets for the RBA have shot up dramatically since the start of the tariffs war. Traders have fully priced in a rate cut for the next meeting with odds of a 50 bps move even seen at ~20% now. For the year itself, they are pricing in ~121 bps of rate cuts. For some context, it was ~72 bps after the 1 April policy meeting.

But at the same time, the aussie has also been a decent performer – especially in the past two sessions. However, the kiwi still holds an edge in terms of overall gains.

Going back to NZD/USD, this is one chart to watch out for on the week. But again, headline risks can still spoil the party at any time. So, just be wary of that.

This article was written by Justin Low at www.forexlive.com.