The NZD/USD pair extended its decline toward 0.5650, weighed down by cautious sentiment ahead of the Federal Reserve’s interest rate decision. Traders remain on edge as uncertainty over the Fed’s policy stance keeps risk-sensitive assets under pressure.
The U.S. dollar continues to gain traction, limiting any recovery attempts for the New Zealand dollar. With expectations of a prolonged higher-rate environment, investors have been shifting away from riskier currencies. A hawkish tone from the Fed could further accelerate losses for the kiwi as rate differentials remain in favor of the greenback.
Market participants are also factoring in global risk sentiment, with slowing economic growth and tighter financial conditions dampening demand for high-yielding assets. Any signs of Fed policymakers adopting a more aggressive stance could reinforce the downward momentum in NZD/USD, with support levels now in focus.
Traders will be closely watching Fed Chair Jerome Powell’s remarks for clues on the central bank’s future rate path. A more dovish outlook could ease some pressure on the kiwi, but until then, sentiment remains fragile, keeping NZD/USD vulnerable to further downside.
