The New Zealand Dollar (NZD) edged lower against the US Dollar (USD) in early Asian trading on Tuesday, with NZD/USD dipping to around 0.5960 as softer-than-expected inflation data boosted expectations of an interest rate cut by the Reserve Bank of New Zealand (RBNZ).
New Zealand Inflation Eases, Triggering Rate Cut Bets
New Zealand’s Consumer Price Index (CPI) data for Q2 2025 revealed weaker inflationary pressures. Annual CPI rose by 2.7%, slightly below market expectations of 2.8%, and down from 2.5% in the previous quarter. On a quarterly basis, inflation cooled to 0.5%, marking a notable deceleration from Q1’s 0.9% and missing the 0.6% forecast.
The weaker inflation print has heightened market anticipation of a dovish shift from the RBNZ. Interest rate futures now reflect an 85% probability that the central bank will lower the Official Cash Rate (OCR) by 25 basis points in its upcoming August policy meeting.
Fed Uncertainty Limits Kiwi’s Losses
Despite the downward pressure on the Kiwi, political noise surrounding the US Federal Reserve has provided some support for NZD/USD. Concerns over central bank independence resurfaced after reports emerged that President Donald Trump considered dismissing Fed Chair Jerome Powell — a claim he later denied. The incident has amplified investor caution and could restrain the USD’s strength in the short term.
Technical Outlook
The pair remains under pressure near the 0.5950–0.5960 zone, with the next key support seen near 0.5920. If selling momentum persists, NZD/USD may revisit its July lows. On the upside, resistance lies around 0.6000, with a break above potentially easing the bearish tone.
Looking Ahead
Traders will closely monitor upcoming RBNZ communications and US economic releases, particularly in light of ongoing political developments and the global rate cut cycle narrative.
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