The NZD/USD pair extended its losses, dipping to 0.5850 as the US Dollar gained strength, supported by robust economic data and hawkish Federal Reserve expectations. Investors are increasingly positioning for a rate-holding stance by the Federal Reserve, which contrasts sharply with the dovish outlook surrounding the Reserve Bank of New Zealand (RBNZ). These diverging monetary policy stances have pressured the New Zealand Dollar, further driving its decline.
Speculation of a more cautious RBNZ, amid soft domestic economic conditions, has amplified headwinds for the NZD/USD. With the RBNZ signaling no urgency for rate hikes and traders pricing in potential rate cuts in 2024, the Kiwi faces heightened selling pressure. Meanwhile, the resilience of the US labor market and persistent inflation are strengthening the Dollar, leaving limited upside for the NZD in the near term.
