On Wednesday (February 19th), the Reserve Bank of New Zealand announced a 50 basis point reduction in the official cash rate (OCR) to 3.75%, which is in line with market expectations. At the same time, the Reserve Bank of New Zealand did not lower its forecast for the final interest rate, but maintained it at the level of 3.10%, which is also one of the reasons why the New Zealand dollar has performed relatively strong in the market.

Although the Reserve Bank of New Zealand expressed optimistic expectations for inflation to remain within its target range and pointed out the risk of economic downturn, the market did not seem to have too much negative reaction to this interest rate cut. According to institutional analysis, the Reserve Bank of New Zealand's interest rate cut this time may be its last 50 basis point cut, so the New Zealand dollar may see a wave of recovery in the coming months.

From the recent trend, the New Zealand dollar/US dollar once fell to around 0.5680, but currently the exchange rate has not further declined. Meanwhile, Adrian Orr, the Chairman of the Reserve Bank of New Zealand, stated at a press conference that he expects to implement another 50 basis point interest rate cut in the middle of the year, with two cuts of 25 basis points each. Orr pointed out that there is still a considerable amount of idle production capacity in the economy, so these two interest rate cuts are appropriate.

However, analysts believe that for the future trend of the New Zealand dollar/US dollar, it is still necessary to pay attention to changes in risk sentiment. Especially the tariff threat from US President Trump may affect the overall sentiment of the market. Trump recently announced plans to impose a 25% tariff on foreign cars and expects to impose tariffs on goods such as semiconductor chips and pharmaceuticals. Although these threats have not yet been implemented, market concerns about related uncertainties may exacerbate the volatility of the US dollar, indirectly affecting the trend of the New York dollar/US dollar.

Technical analyst interpretation:

From the daily chart, the NZD/USD is currently receiving strong support at the 0.5700 level. Although there has been a slight rebound in prices recently, the resistance level above is still relatively strong, especially around 0.5800. This level has been repeatedly seen as a resistance zone by the market, so it is difficult for prices to break through this level in the short term. Unless there is a sudden market event, it is expected that the New York dollar/US dollar will remain in a volatile consolidation range of 0.5700-0.5800 until new positive or negative news has a significant impact on the market.

From the perspective of technical indicators, the MACD indicator has shown a certain dead cross signal in the past few days, indicating that there may be a pullback risk in the market in the short term. However, the RSI relative strength index is still around 50, indicating that the market is not significantly biased towards bulls or bears, and the current trend is still in a volatile consolidation mode. Considering the policy statement of the Reserve Bank of New Zealand and the risk sentiment in the United States, there may be some short-term fluctuations in the New Zealand dollar/US dollar exchange rate, but it is difficult to see a significant unilateral trend.

In addition, the current exchange rate is operating near the upper limit of the Bollinger Bands, and if the price breaks through the upper limit in the short term, it may further challenge the resistance level near 0.5800.

Summary:

The market reaction after the New Zealand Federal Reserve's interest rate cut indicates that the New Zealand dollar/US dollar may remain within a volatile range, especially in the short term due to changes in US economic policies and global risk sentiment. Technical analysis indicates that the current price is within a volatile range, and attention should be paid to breakthroughs in key levels in the short term.