S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- NZD/USD attracts strong follow-through buying for the fifth straight day amid a bearish USD.
- US recession fears, Fed rate cut bets, and a positive risk tone continue to undermine the buck.
- Technical buying above the 200-day SMA contributes to the momentum despite trade tensions.
The NZD/USD pair builds on the previous day’s breakout momentum beyond the 200-day Simple Moving Average (SMA) and gains strong follow-through positive traction for the fifth successive day on Tuesday. The momentum lifts spot prices to the 0.5925-0.5930 region, or a fresh year-to-date high during the Asian session, and is sponsored by the underlying bearish sentiment surrounding the US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near a three-year low amid worries about the economic fallout from the rapid escalation of the US-China trade war. In fact, China increased its tariffs on US imports to 125% on Friday in retaliation to US President Donald Trump’s decision to raise duties on Chinese goods to an unprecedented 145%. Given that the US still imports several hard-to-replace materials from China, the development fuels recession fears and keeps the USD bulls on the defensive.
Meanwhile, expectations that a tariffs-driven US economic slowdown might force the Federal Reserve (Fed) to cut interest rates more aggressively in 2025 turn out to be another factor weighing on the buck. In fact, the markets are currently pricing in the possibility that the US central bank will lower borrowing costs by 90 basis points. Moreover, Trump’s temporary tariff reprieve remains supportive of the positive risk tone, which is further seen undermining the safe-haven Greenback and driving flows toward the perceived riskier Kiwi.
Apart from this, the strong move-up could also be attributed to some technical buying above the very important 200-day SMA. Traders now look forward to the US economic docket, featuring the release of the Empire State Manufacturing Index, which, along with trade developments might influence the USD and provide some impetus to the NZD/USD pair. The focus, however, remains glued to Fed Chair Jerome Powell’s speech on Wednesday, which will be scrutinized for cues about the future rate-cut path and drive the USD demand.
