NZD/USD Hits Weekly High Near 0.6035 on Weaker US Dollar and Trade Surplus

NZD/USD Hits Weekly High Near 0.6035 on Weaker US Dollar and Trade Surplus

The NZD/USD pair extended its upward momentum for the third consecutive session, reaching around 0.6035 during Wednesday’s Asian trading. The pair continues to gain traction as the US Dollar (USD) weakens further amid rising expectations for Federal Reserve rate cuts and improving risk sentiment following the Israel-Iran ceasefire.

Fed Rate Cut Bets Weigh on the US Dollar

The USD Index (DXY) remains under pressure, hovering near a one-week low, as markets increase their bets that the Federal Reserve may ease rates later this year. This comes despite Fed Chair Jerome Powell's cautious stance, emphasizing a wait-and-see approach during his latest testimony.

Trade policy uncertainties under President Trump, combined with softening consumer sentiment, have also contributed to bearish USD pressure.

Ceasefire and Trade Data Boost NZD

In parallel, investor optimism over the Israel-Iran ceasefire, confirmed Tuesday, has improved market sentiment, reducing demand for safe-haven assets like the US Dollar and benefiting risk-sensitive currencies like the New Zealand Dollar (NZD).

Adding to the NZD's strength, New Zealand’s trade balance for May posted a surplus of NZ$1.235 billion, exceeding expectations. The annual deficit also narrowed to NZ$3.79 billion, supporting the Kiwi despite concerns over potential future RBNZ rate cuts and global trade tensions.

Outlook: Cautious Optimism for Kiwi

While short-term momentum favors further gains, traders remain cautious due to uncertainties surrounding the Reserve Bank of New Zealand's next move and the broader global economic outlook.

Related Reading on Tredu.com:

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• Kiwi vs Aussie: Which Currency Has More Upside?