NZD Under Pressure Ahead of RBNZ Policy Decision

Key Takeaways:

* Markets widely expect a 25 bps rate cut as growth slows and inflation remains comfortably within target.

*Softer trade balance and rising unemployment underscore New Zealand’s deteriorating economic momentum.

*Tariff tensions, China’s slowdown, and a dovish RBNZ outlook leave NZD vulnerable to further downside.

Market Summary:

The New Zealand dollar remains under broad downside pressure against major peers, weighed by escalating U.S. trade tensions under Trump’s sweeping tariff policy and lackluster Chinese economic performance. The Kiwi has been lacking a clear catalyst, with markets now turning their focus to tomorrow’s Reserve Bank of New Zealand (RBNZ) policy announcement.

Consensus expectations point to a 25 bps rate cut, as policymakers seek to cushion slowing domestic growth. Inflationary risks remain contained, with the latest CPI reading at 2.7%—comfortably within the RBNZ’s 1–3% target range—allowing the central bank to maintain a dovish stance.

Adding to the case for easing, New Zealand’s trade balance dropped sharply to NZ$142 million from NZ$1.08 billion previously, underscoring weakening economic momentum. Meanwhile, unemployment has climbed to 5.2%, its highest level since 2021, highlighting persistent labor market strains.

A rate cut tomorrow would reinforce the RBNZ’s dovish bias and is likely to drive the Kiwi lower, leaving the currency vulnerable to further downside in the near term.

Technical Analysis 

EURNZD, H4

The EURNZD has extended its uptrend, recently reaching a fresh high of 1.9771 after breaking out of its prior downtrend structure and consolidative range. The pair’s bullish breakout signaled strong upward momentum, but a pullback in the latest session has brought price action to a critical juncture near 1.9670—a level reinforced by the confluence of two key support lines.

A sustained move below this zone would mark a potential bearish reversal signal. Conversely, a rebound above 1.9670 could reaffirm the pair’s bullish bias and open the door for another leg higher.

Momentum indicators remain supportive of the bullish outlook. The RSI is holding above the midline, suggesting buyers still dominate, while the MACD continues to hover around the zero line, indicating that bullish momentum remains intact.

Resistance level: 1.9840, 2.0000

Support level: 1.9505, 1.9378