NZD/USD rebounds toward the mid-0.6000s as the USD softens and Fed–RBNZ policy divergence supports the pair

• NZD/USD sees renewed buying interest on Tuesday as multiple factors weigh on the US Dollar.
• Expectations for two additional Fed rate cuts in 2026, along with a positive risk environment, undermine demand for the greenback.
• The Reserve Bank of New Zealand’s relatively hawkish stance supports the NZD and adds to the pair’s upside.

The NZD/USD pair shows notable resilience below the 0.6000 psychological level and gathers strong upside momentum during Tuesday’s Asian session. Spot prices advance to the 0.6040–0.6045 zone in the past hour, snapping a two-day losing streak amid a modest pullback in the US Dollar.

As markets digest Kevin Warsh’s nomination as the next Federal Reserve Chair, expectations that the Fed will deliver two additional rate cuts this year continue to cap the US Dollar’s rebound from a four-year low reached last week. At the same time, an upbeat risk environment weighs on the Greenback’s safe-haven appeal and supports demand for the risk-sensitive New Zealand Dollar.

Investor sentiment was further buoyed after US President Donald Trump announced on Monday that the United States and India have finalized a trade agreement and will immediately move to reduce tariffs on each other’s goods. In addition, signs of easing tensions between the US and Iran over Tehran’s nuclear program have reduced fears of military escalation, reinforcing the positive market mood.

Further support for the Kiwi comes from the Reserve Bank of New Zealand’s relatively hawkish outlook on the policy path. The RBNZ has signaled a potential end to its easing cycle after cutting rates to 2.25% in November, and now projects the cash rate at 2.20% in the first quarter of 2026 and 2.65% by the fourth quarter of 2027.

Meanwhile, the release of the December 2025 Job Openings and Labor Turnover Survey (JOLTS) and the US Nonfarm Payrolls (NFP) report has been delayed due to a partial US government shutdown. As a result, commentary from key FOMC officials will be closely watched for cues on USD direction and could provide fresh impetus to NZD/USD, which appears poised to extend its two-week uptrend.

Sources: Haresh Menghani