NZD/USD rallies as Dollar Eases on Trade Uncertainty and CPI Miss

• The pair trades around 0.5900, gaining over 1.5% on the day.
• Softer US CPI and mixed Fed expectations keep the USD under pressure.
• New Zealand Dollar benefits from risk sentiment, testing key resistance levels.

NZD/USD trades around the 0.5900 level during the North American session on Tuesday, benefiting from a softer US Dollar (USD) and improving risk sentiment. US President Donald Trump dominated headlines, reiterating his aggressive stance on trade and investment policies. Trump's remarks included calls for "investment agreements" with major corporations, pushing for economic policies that aim to strengthen the US economy but add to market uncertainty.

Meanwhile, the US Dollar Index (DXY), which tracks the performance of the USD against six major currencies, corrected to near 101.50, reflecting broader dollar weakness after the US Consumer Price Index (CPI) for April came in below expectations. The headline inflation rate dropped to 2.3% year-on-year, down from 2.4% in March, as reported by the US Bureau of Labor Statistics (BLS). This reading failed to meet the market consensus of 2.4%, raising doubts about the Federal Reserve's (Fed) ability to maintain its current monetary policy stance.

Additionally, Trump's comments about potentially reducing tariffs on Chinese goods and easing investment restrictions have contributed to a more favorable risk environment, supporting commodity-linked currencies like the New Zealand Dollar (NZD). However, Fitch Ratings noted that the effective tariff rate on Chinese imports remains above 40%, despite recent cuts.

Technical Analysis

NZD/USD is showing bullish signals, trading around 0.5900, up approximately 1.5% on the day. The pair sits near the top of its daily range (0.5847 - 0.5942). The Relative Strength Index (RSI) hovers in the 50s, indicating neutral conditions, while the Moving Average Convergence Divergence (MACD) signals sell momentum. Momentum (10) is around 0, suggesting buy conditions, as do the 10-day Exponential Moving Average (EMA) and Simple Moving Average (SMA), both hovering around 1. The Commodity Channel Index (20) and Awesome Oscillator are both around 0, signaling neutral conditions.

Despite the 20-day SMA signaling a potential sell, longer-term SMAs (100-day and 200-day) favor a continued bullish outlook. Immediate support levels are found around 0.5931, 0.5925, and 0.5909, while resistance lies around 0.5944 and 0.5947. A clear break above 0.5947 could open the door for a move towards the psychological 0.6000 level, while a drop below 0.5900 may expose the pair to further downside risks.

Daily Chart