The New Zealand dollar tumbled to a multi-month low against the US dollar on Thursday, pressured by broad dollar strength and rising concerns over global economic growth. However, the pair managed to pare some of its losses as risk sentiment stabilized later in the session, allowing the kiwi to regain ground.
Early losses in NZD/USD were driven by renewed demand for the US dollar, supported by strong US economic data and persistent expectations that the Federal Reserve will maintain higher interest rates for longer. The kiwi struggled under the weight of a strong greenback, as well as weaker commodity prices, which dampened demand for the export-reliant New Zealand economy.
Despite the sharp decline, the New Zealand dollar found support near key technical levels, triggering a modest rebound as traders adjusted positions. Market sentiment improved slightly after a pullback in US Treasury yields, which eased pressure on risk-sensitive currencies. Additionally, expectations for the Reserve Bank of New Zealand’s (RBNZ) policy path provided some support, though the central bank remains cautious amid slowing domestic growth.
Looking ahead, traders will closely watch upcoming US economic data, particularly inflation and labor market figures, which could provide further clues on the Fed’s interest rate trajectory. A stronger-than-expected reading could reignite dollar strength, while softer data may offer the kiwi more room to recover.
For now, NZD/USD remains under pressure, with the recovery seen as a technical rebound rather than a shift in trend. The pair’s direction will likely depend on a combination of global risk sentiment, US dollar movements, and the RBNZ’s policy outlook in the coming weeks.
