NZD/USD dips as cautious Fed tone and weak NZ backdrop pressure pair

• The pair trades near the 0.5900 zone after slipping 0.40%, pressured by softer New Zealand outlook and steady US Dollar.
• US PPI and Retail Sales missed expectations, but Fed's Powell struck a cautious tone supporting Greenback stability.
• Technical bias is bearish; support at 0.5860 and 0.5846, resistance at 0.5878 and 0.5884.

The NZD/USD is trading around the 0.5900 level on Thursday, facing renewed pressure amid cautious investor sentiment and diverging macroeconomic signals. Despite softer-than-expected inflation and retail sales data in the US, comments from Federal Reserve Chair Jerome Powell offered enough reassurance to keep the Greenback on stable footing. Meanwhile, the New Zealand Dollar struggled to gain traction amid local fiscal announcements that failed to inspire a bullish response.

US data released on Thursday showed the Producer Price Index (PPI) rising 2.4% annually in April, below expectations of 2.5%, while Retail Sales increased just 0.1%, falling short of broader market hopes. These releases added to growing speculation that the Federal Reserve could begin easing rates later in 2025. However, in his remarks at the Thomas Laubach Research Conference, Powell highlighted the need to revisit the Fed's policy framework in light of persistent supply shocks, reaffirming a measured and patient approach to rate changes. This neutral stance helped the US Dollar recover from intraday losses and limited downside momentum.

In contrast, New Zealand's economic narrative remains soft. Finance Minister Nicola Willis unveiled a NZ$190 million social investment fund, aimed at improving long-term outcomes for vulnerable groups. While the initiative underscores fiscal discipline and targeted intervention, it had limited immediate impact on NZD sentiment. Market focus now shifts to Thursday evening's Business NZ Performance of Manufacturing Index and Friday's RBNZ inflation expectations survey, both of which may shape expectations for future rate decisions by the Reserve Bank of New Zealand.

NZD/USD technical outook

From a technical perspective, NZD/USD maintains a bearish bias, with the pair slipping toward the mid-point of the daily range between 0.5860 and 0.5916. The Relative Strength Index (RSI) hovers in the 40s, showing weak momentum, while the MACD prints a sell signal. Additional neutral signals from the Stochastic %K, Commodity Channel Index (CCI), and Bull Bear Power suggest a lack of conviction for a rebound. Short-term indicators including the 10-day EMA and 20-day SMA reinforce downside pressure, while only the 100-day SMA offers modest bullish support.

Key support levels are seen at 0.5860, 0.5846, and 0.5829, while resistance lies near 0.5878, 0.5883, and 0.5884. Unless upcoming New Zealand data surprises to the upside, the pair may continue drifting lower as investors favor the relative safety of the US Dollar in a cautious macro environment.