NZD/USD Rises to 0.6050 as Markets Worry Over Fed Independence and Powell's Position

NZD/USD Rises to 0.6050 as Fed Independence Concerns Weigh on US Dollar

The New Zealand Dollar (NZD) gained ground against the US Dollar (USD) early Thursday, with the NZD/USD pair climbing to 0.6050 in the Asian session. The Kiwi’s rise comes amid growing investor concerns about the future independence of the Federal Reserve, triggered by reports that US President Donald Trump may be considering an early replacement of Fed Chair Jerome Powell.

Trump Eyes Early Powell Replacement — Fed Credibility at Stake

According to a report from the Wall Street Journal, President Trump is weighing a decision to nominate a new Federal Reserve Chair as early as September or October. Sources close to the matter suggest the announcement could even come this summer, reflecting Trump’s continued dissatisfaction with Powell’s leadership and interest rate policy.

Such political interference could undermine the credibility and autonomy of the Fed, a scenario that’s unnerving investors and applying broad pressure on the US Dollar.

Market Bets on a July Rate Cut Rise Sharply

Market expectations for a Federal Reserve rate cut have increased sharply. According to the CME FedWatch Tool, the probability of a rate cut in July has surged to 25%, up from 12% last week.

This shift comes as investors fear that Fed policy decisions could become more politically driven, potentially leading to premature or excessive rate reductions even as inflation risks remain elevated.

Key US Economic Releases in Focus

Alongside speculation about the Fed's leadership, markets are eyeing key US macroeconomic indicators due later on Thursday:

• Q1 GDP Growth Rate (Final)
• Durable Goods Orders (May)
• Initial Jobless Claims (Weekly)

Weaker-than-expected data could further fuel rate cut speculation and weigh on the USD, offering additional upside to the NZD/USD pair.

NZD/USD Technical Overview

• Current Price: 0.6050
• Immediate Resistance: 0.6075
• Next Resistance: 0.6100
• Support Levels: 0.6020 and 0.5985

If the pair breaks and holds above 0.6075, bullish momentum could drive it toward the next resistance at 0.6100. However, caution is advised ahead of US data releases and political headlines.

Related Articles on Tredu.com

• Rate Cut Watch: What July’s FOMC Could Bring
• How Fed Credibility Impacts the US Dollar
• NZD/USD Technical Forecast and Key Levels
• Trump’s Influence on the Federal Reserve Explained

Conclusion

The NZD/USD pair’s rise to 0.6050 reflects growing market discomfort over the Fed’s future independence and increased expectations of monetary easing. As the market prices in potential changes at the top of the Federal Reserve and awaits US economic data, the US Dollar may remain vulnerable.

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