Correction Looms as NZD/USD Struggles to Post New High

Central Bank

Economic

Summary:

If the pair fails to break above the current resistance, sellers may begin to re-enter, paving the way for a deeper retracement.

SELL NZDUSD

Close Time

CLOSED

0.58128

Entry Price

0.56700

0.58800

0.57842 -0.00198 -0.34%

67.2

Pips

Loss

0.56700

0.58800

Exit Price

0.58128

Entry Price

0.58800

The Reserve Bank of New Zealand (RBNZ) cut its official cash rate by 25 basis points during its April policy meeting on Wednesday, responding to ongoing disinflationary trends and signs of a broader economic slowdown. While the decision was widely expected, some analysts had projected a more aggressive cut of 50 basis points, reflecting growing concerns about the domestic outlook. Markets are now pricing in the potential for up to 100 basis points of further easing through 2025, a development that could weigh on the New Zealand Dollar (NZD) over the short to medium term.

At the same time, U.S. President Donald Trump announced a 90-day suspension of reciprocal tariffs on countries that have chosen not to retaliate, even as fresh levies were imposed on Chinese goods in response to Beijing’s countermeasures. While acknowledging that trade tensions have caused volatility in financial markets, Trump maintained that constructive trade agreements with China and other nations remain achievable.

On the economic front, the latest U.S. Producer Price Index (PPI) figures revealed a sharper-than-expected decline in wholesale prices. PPI fell by 0.4% in March from the previous month, following a slight upward revision to February’s figure, which now stands at a 0.1% increase. Economists surveyed by Bloomberg had forecast a 0.2% rise for March, making the actual data a notable downside surprise.

Core PPI, which strips out the more volatile food and energy components, dropped 0.1%, defying expectations of a 0.3% uptick. Several components that feed into the Federal Reserve’s preferred inflation gauges also came in weaker, casting further doubt on the sustainability of price pressures and complicating the Fed’s policy path.

St. Louis Fed President Alberto Musalem warned of the possibility that inflation may pick up even as labor market conditions weaken—a scenario that would require cautious monitoring. He also emphasized that long-term inflation expectations must remain well anchored, particularly in light of the uncertain impact of tariffs and other economic policies.

“There is a great deal of uncertainty around the net effects and timing of how evolving trade, immigration, fiscal, and regulatory policies will influence prices, employment, and overall activity,” Musalem said during remarks in Hot Springs, Arkansas. “We cannot rule out a situation where inflation accelerates while the labor market deteriorates.”

Boston Fed President Susan Collins echoed similar concerns, stating that policy unpredictability—especially surrounding tariffs—is reducing the central bank’s flexibility to respond effectively. Minneapolis Fed President Neel Kashkari further underlined the risks, warning that prolonged tariffs could both unanchor inflation expectations and act as a drag on economic growth. In a recent essay published by the Fed, Kashkari noted that the evolving policy landscape has made the monetary outlook far more complex and uncertain.

Meanwhile, New York Fed President John Williams stated that he expects broad-based economic data from the U.S. to weaken further as the full impact of tariffs becomes more entrenched. Correction Looms as NZD/USD Struggles to Post New High_1

Correction Looms as NZD/USD Struggles to Post New High_1

Technical Analysis

NZD/USD has recently approached a notable resistance zone near 0.5839, which lies just below the local high of 0.5854 reached on April 3. Price action has so far failed to break above this level, suggesting a potential exhaustion of bullish momentum. This inability to post a new high could signal the beginning of a corrective phase, with the next key support located around 0.5661.

This support area also aligns with the 100- and 200-period moving averages on the 4-hour chart, currently positioned at nearby levels, reinforcing its importance. Should the current resistance continue to hold, price may gravitate toward that area during a pullback.

The RSI recently touched 78, entering deep overbought territory—a level that has previously triggered downside movements. If the pair fails to break above the current resistance, sellers may begin to re-enter, paving the way for a deeper retracement. However, if NZD/USD manage to post a higher high above 0.5854, the bullish trend may regain traction and continue toward higher targets.

Trading Recommendations

Trading direction: Sell

Entry price: 0.5812

Target price: 0.5670

Stop loss: 0.5880

Validity: Apr 23, 2025 15:00:00

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Correction Looms as NZD/USD Struggles to Post New High

Technical Analysis

Risk Disclosure