Rate Wars, Risk Flows, and Rebounds
Currently trading at .59 The NZD/USD has recently rebounded from its lowest level since October 2022. The pair has drawn the attention of forex traders in 2025. This is because of different central bank policies. It is also due to changing risk sentiments and shifts in commodities.
Starting the year trading around 0.59, the kiwi has faced downward pressure since then. Volatility has been attributed to interest rate cuts and risk appetite. In this article, we will look closely at the NZD/USD exchange rate. We will explore the key factors that affect this rate.
The Reserve Bank of New Zealand has kept a strong stance this year. The official cash rate (OCR) is 5.50 percent as of May 2025. This rate is one of the highest in developed economies. Key considerations for this cash rate and factors the bank will continue to monitor include:
- Wage growth,
- Business confidence,
- Consumer prices,
- and Housing market pressures.
In March 2025, Governor Adrian Orr said it would be too early to talk about rate cuts. He wants to wait until inflation stays within the target range
The Federal Reserve is also affecting the pair. The Fed is being careful with its policy messages. This is happening as U.S. economic data stays strong. Key points in the U.S. that make the Fed careful include core PCE at 2.9 percent. This is above the Fed’s target of 2.0 percent. Other factors are GDP growth and the Fed Funds rate at 5.25 percent.
Traders of NZD/USD should closely watch key data. This includes CPI, dairy auction results, and RBNZ interest rate decisions. They should also pay attention to the minutes from New Zealand. From the U.S. key data reports to analyze will be FOMC statements, ISM manufacturing, and Non-farm payrolls (monthly).
NZD/USD Daily Chart
From a time period perspective, traders should keep an eye on the middle of May 2025 and/or the middle of June 2025. These periods hint at a possible inflection point of entering consolidation or changing course of another wave length.
The pair will likely keep seeing ups and downs with a positive trend. The Kiwi and Greenback are balancing growth risks and worries about inflation. However, we should not ignore global risks that affect the pair. The Kiwi is still influenced by macroeconomic forces.
Written by Sigmanomics Team
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Ronald Francois
Ronald is a senior market strategist at Sigmanomics.com, bringing over a decade of hands-on experience in equity markets and three years of specialized expertise in options trading. Known for his sharp fundamental analysis and deep understanding of macroeconomic trends, Ronald provides readers with actionable insights that bridge the gap between institutional strategy and individual investor needs.
Ronald Francois, Senior Strategist
Ronald is a senior market strategist at Sigmanomics.com, bringing over a decade of hands-on experience in equity markets and three years of specialized expertise in options trading. Known for his sharp fundamental analysis and deep understanding of macroeconomic trends, Ronald provides readers with actionable insights that bridge the gap between institutional strategy and individual investor needs. Featured in fxstreet.com
