07.05.202519:31 Forex Analysis & Reviews: NZD/USD. Analysis and Forecast

The NZD/USD pair is pulling back from a more than two-week high in the 0.6025–0.6030 level. Currently, the quotes have fallen below the psychological level of 0.6000, signaling a pause in the three-day winning streak amid a mix of influencing factors.

Among the key drivers of this move are positive global sentiment sparked by news of U.S.-China trade talks taking place in Switzerland. Additionally, New Zealand's labor market data showed a steady unemployment rate of 5.1% in Q1 2025, which slightly exceeded expectations and provided modest support for NZD/USD. The number of employed people rose by 0.1% after a 0.2% decline in the previous quarter, which also helped to support the pair.

However, the initial optimism proved to be short-lived. The modest employment growth and slowing wage increases leave room for further interest rate cuts by the Reserve Bank of New Zealand (RBNZ), potentially lowering the rate to 2.75% by the end of the year. These expectations were reinforced by the latest RBNZ Financial Stability Report, which highlighted risks to domestic economic growth.

In addition, modest U.S. dollar strength is weighing on NZD/USD, although USD bulls are mostly waiting for the outcome of the upcoming FOMC meeting.

The Federal Reserve is expected to announce its decision on Wednesday, and market focus will be on the accompanying policy statement and Fed Chair Jerome Powell's comments for insight into the rate-cut path. These developments will significantly impact demand for the U.S. dollar and, accordingly, the movement of the NZD/USD pair.

Thus, traders' current focus is on the 0.6000 level as a key psychological marker, as well as on the upcoming news from the Fed, which could shift market momentum. For now, since oscillators on the daily chart remain in positive territory, the path of least resistance for the pair remains to the upside. However, intraday, the pair may continue correcting lower.