- NZD/USD gains on easing tensions after Trump signaled pausing tariffs on Europe over Greenland.
- The US Dollar may gain support as expectations grow that the Fed will maintain a cautious policy stance.
- Traders await Friday’s Q4 CPI to gain the RBNZ’s policy outlook.
NZD/USD extends its winning streak for the fifth consecutive session, trading around 0.5860 during the early European hours on Thursday. The pair gains ground as the New Zealand Dollar (NZD) receives support amid easing risk aversion after US President Donald Trump said he would step back from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland.
However, the upside of the NZD/USD pair could be limited as the US Dollar (USD) could also gain ground from the easing of the tariff war between the United States (US) and the European Union (EU). President Trump also noted that the United States and the North Atlantic Treaty Organization (NATO) had “formed the framework of a future deal regarding Greenland.” However, he did not outline the parameters of the so-called framework, and it remained unclear what the agreement would entail.
Additionally, the Greenback could receive support from rising expectations of cautious sentiment surrounding the Federal Reserve (Fed) policy outlook. Fed officials have indicated limited urgency to ease policy without clearer evidence that inflation is moving sustainably toward the 2% target, even as markets still price in 50 basis points of rate cuts later this year.
Traders await US weekly Initial Jobless Claims, Gross Domestic Product Annualized, and Personal Consumption Expenditures Prices (PCE) inflation data due later in the day for fresh signals in the US economy.
In New Zealand, traders will focus on Friday’s Q4 CPI for insight into the Reserve Bank of New Zealand’s (RBNZ) policy outlook, with annual inflation expected to rise to 3%, the top of its 1–3% target range. An upside surprise could reinforce expectations for higher interest rates.
