NZD/USD pulled back toward a major upward trendline near the 0.59 handle after the US dollar strengthened broadly on hawkish comments from Fed Chair Warsh. Attention now turns to the Reserve Bank of New Zealand's upcoming rate decision, where the bank is widely expected to raise the Official Cash Rate.
NZD/USD pulled back from a resistance zone around the 0.5990 level and now trades close to a major upward trendline near the 0.59 handle. The move follows a broad strengthening of the US dollar after Fed Chair Warsh delivered a hawkish speech at the Jackson Hole Symposium.
Warsh's hawkish tone lifts the dollar
On Friday, Warsh said, according to Investinglive: "I would be hard pressed to describe broad financial conditions as restrictive". Markets read the remark as pushback against the recent easing in financial conditions, retightening those conditions and extending the correction in so-called "debasement" trades. As a result, the dollar returned to its levels from before the US Treasury announcement, and September rate-hike probabilities rose to 60%.
Warsh also reiterated that the Fed is focused solely on inflation, adding that progress has been slow. Investinglive's analysis suggests only a soft US CPI report would likely pull those probabilities below 50% and deter a hike, since holding rates despite firm odds could otherwise send a dovish message.
RBNZ decision comes into focus for the kiwi
The Reserve Bank of New Zealand is widely expected to raise the Official Cash Rate by 25 basis points to 2.75% this week. In its latest projections, the central bank signaled the OCR could rise to 3.00% by year-end and hold there through 2027. Market pricing matches the RBNZ's 2026 path but prices in two more rate hikes for 2027 than the bank has signaled, leaving downside risk for the kiwi if the RBNZ fails to match or outhawk market expectations.
Trendline test defines the technical picture
On the daily chart, NZD/USD remains in an uptrend marked by clean swing highs and lows, having pulled back from resistance near the 0.5990 level toward the major trendline. Buyers will likely lean on the trendline to keep pushing toward new highs, while sellers will look for a break lower to extend the drop toward the 0.55 handle.
Source: Investinglive (Investinglive RSS Breaking News Feed)
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