On Friday during the Asian session, the New Zealand dollar against the US dollar (NZD/USD) continued its upward trend, closing around 0.5770 and briefly touching 0.5800 during trading, reaching its highest level since the beginning of the week. After the US dollar index (DXY) fell below the 100 mark, non US currencies rebounded overall, and the New Zealand dollar also benefited from the upward trend.

US President Trump unexpectedly announced this week that he would impose tariffs of up to 145% on major Asian countries, far higher than the previous 104% Despite implementing a 90 day suspension for other countries, this move still raises further concerns in the market about the global economic slowdown.

High tariffs are disrupting the global trading system, causing investors to shift their focus from US dollar assets to other currencies. "- Market research shows

From the trend of the US dollar, weak inflation data and intensified trade uncertainty have put pressure on it. The latest data shows that the US CPI has fallen to 2.4% year-on-year, far below market expectations, which has raised expectations that the Federal Reserve will start cutting interest rates in June. According to CME data, the probability of the Federal Reserve cutting interest rates in June has risen to 68%, with a potential cumulative rate cut of 100 basis points within the year.

In this context, the US dollar has lost some of its safe haven properties, and funds are flocking to commodity currencies and high-yield assets, benefiting the New Zealand dollar as a result.

However, the New Zealand dollar itself still faces monetary policy constraints from within New Zealand. The Reserve Bank of New Zealand (RBNZ) lowered interest rates by 25 basis points to 4.75% on Wednesday, marking the third consecutive rate cut, mainly due to the continued decline in domestic inflation and economic weakness.

We believe that RBNZ will have 50 to 75 basis points of room for interest rate cuts before the end of this year. "- New Zealand ASB Bank Strategy Analysis

The market currently expects the RBNZ to accumulate interest rate cuts to 3.75% by 2025, which limits the medium to long-term rebound space of the New Zealand dollar.

From a technical perspective, if NZD/USD breaks through 0.5800, the next target level will point towards the 0.5850 line. The short-term support level is at 0.5730. If it falls below this level, the upward trend may be interrupted.

Editor's viewpoint:

The New Zealand dollar has benefited from the weakening of the US dollar and the spread of safe haven sentiment in the short term, but the loose tone of the RBNZ in the medium term will put pressure on it. At present, the market has entered a stage of chaotic policy expectations, and currency trends are extremely sensitive to geopolitical news. Whether the New Zealand dollar can continue to break through under Trump's high tariff stimulus depends on the next move of the Federal Reserve.