NZD USD

A stalled recovery in the Aussie and Kiwi is raising fresh questions over whether recent gains have legs. With bearish candles emerging and the US dollar back in demand, the path of least resistance may be lower—at least for now.

The antipodean rally is rolling on, led by the Kiwi’s clean breakout and a bullish Aussie not far behind. With strong correlations to cyclical plays in China, could fresh U.S. trade tensions be the next hurdle—or the next catalyst?

A reliable technical pattern, a key breakout, and a surprise link with gold—are we seeing a trend shift for the Kiwi?

The RBNZ refrained from any knee-jerk reaction to trump’s tariffs and cut by the expected 25bp to 3.5%. But further easing seems likely, prompting a sympathy bid for NZD/USD and AUD/USD. Though larger forces are likely to keep any upside capped for now.

NZD/USD clears the 2022 low (0.5512) as it carves a series of lower highs and lows.

The culling of EUR/USD shorts on the futures market was the fastest weekly pace since the pandemic, which also coincided with futures traders effectively flipping to net-short USD for the first time since October. Bears also short-covered NZD/USD shorts at their fastest pace since December 2011, while predictably chasing gold prices higher as we suggested last week.

The Kiwi is clinging to .5800 ahead of a pivotal day for markets, but its fate may lie with the Chinese yuan. With traders watching USD/CNH closely, could the next NZD/USD move be decided in Beijing rather than Wellington?

With a 50bp rate cut all but certain, the RBNZ’s guidance will be the real market mover. Will policymakers stick to their previous rate path, or will markets be forced to rethink their aggressive easing bets? NZD/USD sits near multi-month highs—can it launch if the central bank pushes back against dovish expectations?

If the mighty US dollar fails to rally on what is usually a sure-bullish bet, then it may not take much to send it lower. Market positioning has already sent such clues, and price action this week continues to suggest a correction could be underway.

Given that commodity currencies such as AUD/NZD and NZD/USD have succumbed to USD strength for the best part of four months, the idea of a correction may not be overdue. Add into the mix bullish divergences on net-short exposure and false break of key lows, perhaps one is already underway.

With domestic inflation concerns firmly in the rear view mirror, NZD/USD remains at the mercy of global forces. Can the Kiwi chart a new course amid signs of easing US trade policy concerns?