The New Zealand dollar remained under pressure on Wednesday, with NZD/USD hovering near 0.5700, as investors grew cautious ahead of potential US tariff announcements on China. The uncertainty surrounding trade policy has dampened risk sentiment, keeping the kiwi on the defensive while the US dollar remains firm.
Markets are closely watching developments in US-China trade relations, as reports suggest that Washington is considering fresh tariffs on Chinese goods. Any escalation in trade tensions could weigh on global risk assets, further pressuring commodity-linked currencies like the New Zealand dollar, which is highly sensitive to shifts in global trade flows.
At the same time, the US dollar continues to find support, bolstered by elevated Treasury yields and speculation that the Federal Reserve may keep interest rates higher for longer. While traders still anticipate rate cuts later this year, recent US economic data has been stronger than expected, keeping the greenback well-positioned against riskier currencies like the NZD.
Domestically, the Reserve Bank of New Zealand (RBNZ) remains in focus, with investors looking for clues on the central bank’s next policy move. The RBNZ has signaled caution on rate cuts, but with slowing economic momentum and external risks mounting, speculation about easing later this year persists, further capping the kiwi’s upside.
Technical indicators suggest NZD/USD remains vulnerable, with support near 0.5680 and resistance around 0.5750. A break below current levels could trigger further losses, especially if US-China trade tensions escalate, while a softer US inflation print or dovish Fed commentary could provide relief for the kiwi.
For now, NZD/USD remains stuck in a weak position, with traders waiting for clearer signals on US trade policy and global economic conditions. Until those catalysts emerge, the pair is likely to stay pressured, with the US dollar maintaining the upper hand in the near term.
