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The NZD/USD currency pair is recovering after bouncing from the 0.6030 level, which marks a weekly low, and is attempting to gain further positive momentum. This suggests a break in the two-day losing streak amid a moderate weakening of the U.S. dollar.
Investors have scaled back expectations for a Federal Reserve rate cut in July following Thursday's stronger-than-expected U.S. Nonfarm Payrolls (NFP) report. However, the market's initial reaction was short-lived due to concerns that President Donald Trump's tax and budget bill could exacerbate the U.S. debt situation over the long term. These concerns are weighing on bullish sentiment toward the U.S. dollar, creating favorable conditions for gains in the New Zealand currency.
In addition, a broadly positive market tone is reducing the appeal of the dollar as a safe-haven asset, thereby supporting risk-sensitive assets, including the New Zealand dollar. As a result, the NZD/USD pair is on track for a second consecutive weekly advance, although uncertainty surrounding the Trump administration's trade policy may limit further upside. Light trading volumes ahead of U.S. holidays are also contributing to investor caution and restraining aggressive market moves.
Market participants are now focused on the upcoming inflation data from China and next Wednesday's Reserve Bank of New Zealand (RBNZ) meeting, both of which could have a significant impact on the New Zealand dollar and set the next directional cue for NZD/USD. Nonetheless, current fundamental factors favor continued U.S. dollar weakness, indicating that the upward trend for this currency pair is likely to persist.
From a technical perspective, oscillators on the daily chart remain in positive territory, suggesting that the path of least resistance for the pair remains to the upside.
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