On Tuesday during the Asian session, the New Zealand dollar against the US dollar (NZD/USD) continued the technical momentum brought by its previous breakthrough over the 200 day simple moving average (SMA), rising for the fifth consecutive trading day and touching the range of 0.5925-0.5930, setting a new high since 2025. The combination of technological breakthroughs and the continued weakness of the US dollar has provided solid support for the New Zealand dollar.

The strengthening of the New Zealand dollar is not accidental, and the weakness of the US dollar is due to structural reasons rather than short-term emotional fluctuations. "- According to market research

The US dollar continues to be under pressure, with trade concerns and expectations of interest rate cuts weakening its safe haven nature

The US Dollar Index (DXY) is currently hovering around its lowest level in three years, mainly suppressed by the following factors:

Trade concerns continue to heat up: US President Trump announced last week that he would impose tariffs of up to 145% on goods from major Asian countries, and subsequently Asian countries retaliated by raising tariffs on the US to 125%. The US still needs to import a large amount of irreplaceable raw materials from Asian countries, which has raised high concerns in the market about the US supply chain and corporate costs.

The risk of economic recession in the United States is increasing: the deterioration of the trade environment coupled with weakened consumer spending, and market expectations suggest that the US economy may fall into a technical recession by 2025.

The Federal Reserve is highly likely to implement multiple interest rate cuts within the year: currently, the market has basically included the expectation of a 90 basis point interest rate cut in 2025. The decrease in interest rates will further weaken the attractiveness of the US dollar.

Trump's temporary tariff exemptions boost risk appetite, positive for New Zealand dollars

Although Trump has stated that he will temporarily exempt new tariffs on goods such as smart devices and the automotive industry, partially easing global trade tensions, this "breathing space" has stimulated a rebound in market risk appetite, benefiting risk assets and high-yield currencies. The New Zealand dollar, as a representative of commodity currencies, has performed remarkably well against the backdrop of improved global risk sentiment.

Under the dual support of the Federal Reserve's policy shift and global risk recovery, the New Zealand dollar still has room for sustained upward momentum in the future. "- According to market research

From a technical perspective, the NZD/USD has successfully broken through the 200 day moving average and remained stable above it, indicating a stable bullish structure. If the exchange rate can continue to break through the 0.5930 line, it will open up space for further challenges in the 0.5985-0.6000 range.

The short-term support level is located in the range of 0.5880-0.5865, which is an important long short watershed in the pullback. If it falls, the key support below will look towards 0.5820 near the 200 day moving average.

The market will currently focus on the release of the US manufacturing index on Tuesday as an important window to observe the outlook for the US economy. And this week's focus will be on Federal Reserve Chairman Powell's speech on Wednesday, which is expected to provide important clues for future policy paths and have a key impact on the trend of the US dollar and the future of the New York dollar.

Editor's viewpoint:

The current strong trend of the New Zealand dollar is based on the systematic weakening of the US dollar and the easing of market risk aversion. Although the long-term impact of trade frictions cannot be ignored, technical support and a rebound in risk sentiment provide conditions for a sustained rebound in the New Zealand dollar.

If the Federal Reserve releases a clearer dovish signal in the short term, NZD/USD may further advance towards the psychological level of 0.60. However, we need to be vigilant about the potential risk of a pullback caused by repeated sudden trade policies, and it is recommended to closely monitor the relevant statements before and after the Federal Reserve meeting.