NZD/USD holds above 0.5750 as February's Trade Balance swings to surplus

• NZD/USD inches higher following New Zealand's Trade Balance data on Friday.
• New Zealand's Trade Balance showed a surplus of $510 million in February, reversing the previous month's $544 million deficit.
• The pair's upside may be limited as the US Dollar (USD) remains firm amid growing risk aversion.
• However, the pair's upside may be limited as the US Dollar (USD) remains firm amid growing risk aversion.

NZD/USD pauses its three-day losing streak, trading around 0.5760 during European hours on Friday. The New Zealand Dollar (NZD) found little support following New Zealand's trade balance data, which showed a surplus of $510 million in February, reversing the previous month's $544 million deficit. Data released on Friday showed that goods exports surged 16% to $6.74 billion, while imports saw a modest 2.1% increase to $6.23 billion.

Although New Zealand's economy has emerged from recession, underlying weaknesses persist. Markets continue to anticipate policy easing, with expectations of around 60 basis points (bps) in rate cuts--equivalent to two or three reductions--by the end of the year.

However, the upside of the NZD/USD pair may be capped as the US Dollar (USD) remains firm amid rising risk aversion driven by escalating global trade tensions linked to US tariff policies. Federal Reserve (Fed) Chair Jerome Powell downplayed the inflationary impact of tariffs, calling them temporary, but acknowledged the broader economic uncertainty they create.

On the US data front, Initial Jobless Claims rose to 223K for the week ending March 15, slightly below the 224K forecast but exceeding the prior week's revised 221K. Meanwhile, the Philadelphia Fed Manufacturing Survey for March dropped to 12.5 from February's 18.1, marking a second consecutive monthly decline but remaining above the expected 8.5.