NZD/USD Slides as Rate‑Hike Odds Collapse; RBNZ Signals Data‑Dependent Pause
NZD/USD fell sharply to about 0.5850 after markets materially reduced expectations of further Reserve Bank of New Zealand (RBNZ) rate hikes. Key data: February inflation 3.2% YoY (below RBNZ 4.0% forecast), core inflation 2.8%, unemployment 4.3%, and wage growth 3.8%—all pointing to cooling domestic momentum. Technicals worsened: breach of 0.5900 support, next major floor at 0.5800, a 50-day/200-day “death cross,” and RSI in oversold territory. Market-implied odds of another 2025 RBNZ rate hike dropped from ~65% to ~15%; expected timing for cuts moved forward to late 2025. Commodity pressures (dairy prices down 4.2%, logs -3.1%) and a weakening terms-of-trade also reduce NZD carry appeal as interest-rate differential with the US narrows. Strategists warn of further downside (targets cited near 0.5750), while positioning shows large reductions in NZD longs. Key events to watch: RBNZ Monetary Policy Statement (April 10), US inflation/Fed commentary, and NZ Q1 GDP. Implication for traders: increased bearish bias on NZD/USD, higher volatility around RBNZ/data releases, and diminished carry trade attractiveness.
Bearish
The article describes both fundamental and technical drivers pointing to NZD weakness. Fundamentally, softer-than-expected inflation, rising unemployment, moderating wage growth, and falling key export commodity prices reduce the case for further RBNZ tightening and narrow the NZD–USD interest‑rate differential. Market-implied odds of another RBNZ hike plunged (from ~65% to ~15%), shifting expectations toward cuts in late 2025 — a clear negative catalyst for NZD. Technically, breach of 0.5900, a death cross (50/200 MA), oversold RSI, and increased trading volumes during the decline indicate genuine bearish momentum and potential for continuation toward cited targets near 0.5750. Positioning data (large unwinds of NZD longs) increases downside pressure and reduces the scope for sustained recoveries without fresh positive fundamentals. For traders: expect short-term volatility around RBNZ communications and US data, with a higher probability of further NZD losses absent clear upside surprises. In the longer term, NZD direction will hinge on RBNZ guidance, commodity price stabilization, and the US Fed path; if those shift to favor tighter NZD fundamentals, reversals are possible but currently unlikely.