NZD/USD Slides Below 0.5940 as Markets Eye US-China Trade Truce Talks

NZD/USD Weakens as Investors Await US-China Trade Progress and US CPI

The New Zealand Dollar (NZD) is under renewed selling pressure at the start of the week, slipping below 0.5940 against the US Dollar (USD) during Monday’s trading session. This marks a notable pullback from last week’s gains, as markets refocus on geopolitical risks and macroeconomic catalysts.

Uncertainty Surrounds US-China Truce Deal

Investors are keeping a close eye on US-China trade negotiations, with the current ceasefire agreement set to expire on August 12. The primary sticking point appears to be Washington’s continued ban on AI chip exports to China, while Beijing raises security concerns over Nvidia’s H20 semiconductors.

The lack of public commentary from US President Donald Trump, who typically plays an active role in trade developments, is adding to the market's unease. A failure to extend the truce could rekindle trade tensions and weigh on the New Zealand Dollar, which is highly sensitive to Chinese economic developments due to strong trade ties.

NZD/USD Trims Gains After Last Week's Rally

Last week, NZD/USD rose around 0.65%, primarily supported by increasing expectations that the Federal Reserve will cut interest rates at its September meeting. However, this momentum has since faded as traders exercise caution ahead of several key risk events.

US CPI in Focus for Fed Rate Outlook

Market participants now await the release of US Consumer Price Index (CPI) data on Tuesday, which could offer more clarity on the Fed’s policy direction. A hotter-than-expected CPI print may dampen expectations for aggressive rate cuts and boost the US Dollar, adding further pressure on NZD/USD.

Technical Outlook

Immediate support for the pair lies near 0.5920, with further downside risk toward 0.5900 if sentiment deteriorates. Resistance is now seen at 0.5950, with a more significant barrier at 0.5985, last week’s swing high.

Until clearer signals emerge from both the US-China negotiations and inflation data, the pair is likely to remain in a cautious, range-bound trade.