NZD/USD jumps as RBNZ signals end to easing; dollar slips on dovish Fed bets and soft jobs data
The New Zealand dollar outperformed after the RBNZ cut rates and flagged a long hold, while the U.S. dollar weakened broadly as traders priced a high chance of a December Fed rate cut following softer private payrolls and fresh speculation around the next Fed Chair.
Dollar softens as markets lean into a December Fed cut
The greenback lost ground after a weaker ADP employment print and a Bloomberg report suggesting Kevin Hassett has emerged as a leading candidate for the Federal Reserve’s top job. The move extended losses sparked by Fed policymaker John Williams backing a December cut late last week. Markets now assign roughly a 76% probability to a December reduction, pressuring U.S. yields and the dollar ahead of the FOMC.
With little major data left before the meeting, attention centers on jobless claims and any further labor-market signals. Softer readings are likely to keep the dollar on the defensive; stronger prints may deliver only fleeting support as positioning coalesces around the policy decision and the subsequent NFP and CPI releases.
RBNZ ends easing cycle, lifting the kiwi
The Reserve Bank of New Zealand reduced the Official Cash Rate to 2.25% as expected and signaled the end of its easing cycle, indicating the OCR should remain at current levels through 2026. Markets quickly priced out previously expected 2026 cuts, giving the kiwi a firm tailwind as rate differentials shifted in NZD’s favor and policy visibility improved.
Key Points
- USD slid after soft ADP data and talk that Kevin Hassett is a frontrunner for Fed Chair, reinforcing dovish Fed pricing.
- Traders see about a 76% chance of a December Fed cut; slim data calendar keeps focus on claims and labor momentum.
- RBNZ cut the OCR to 2.25% and signaled the end of the easing cycle, guiding a hold through 2026 and boosting NZD.
- NZD/USD tests a descending trendline on the daily chart; a break higher opens 0.5850, while failure turns focus back to April lows.
- On the 4-hour chart, 0.5690 is a key support; a clean break below would risk fresh cycle lows.
NZD/USD technical picture
Daily timeframe
NZD/USD has bounced sharply off recent lows, aided by dovish U.S. rates repricing and the RBNZ’s policy shift. Price is approaching a well-defined descending trendline that has capped rallies. Sellers may look to fade strength into that line, with risk defined just above it, eyeing a return toward April’s trough. A sustained break and close above the trendline would flip momentum higher and expose the 0.5850 resistance zone.
4-hour timeframe
A robust support band sits near 0.5690. Dips into this area may attract buyers seeking a higher low and a trendline breakout attempt. A decisive move below 0.5690 would undermine the rebound and open the path toward new lows.
1-hour timeframe
Intraday flows are consolidating, with traders watching for a bounce from support or a breakdown to set the next impulse move. Short-term direction is likely dictated by U.S. labor prints into the FOMC window, with liquidity thinner and FX volatility sensitive to data surprises.
Market outlook
The broader macro setup keeps the dollar reactive to labor and inflation signals. If the Fed validates market expectations in December, high-beta FX such as NZD could retain an edge, especially with the RBNZ signaling policy stability. However, an upside surprise in U.S. data or a more cautious Fed tone could revive the dollar and cap NZD/USD upside. As always, risk appetite, U.S. yields, and the trajectory of global growth will be critical crosswinds for FX traders, BPayNews notes.
FAQ
Why is the U.S. dollar weakening?
The dollar has eased as softer ADP jobs data and growing market conviction in a December Fed rate cut pushed U.S. yields lower. A report naming Kevin Hassett as a leading Fed Chair candidate added to the dovish narrative.
What did the RBNZ decide and how did it affect NZD?
The RBNZ cut the OCR to 2.25% and signaled the end of its easing cycle, indicating rates are likely to stay put through 2026. Markets priced out future easing, supporting NZD via improved rate differentials and policy clarity.
What are the key NZD/USD technical levels?
On the daily chart, a descending trendline is the first resistance; a break higher targets the 0.5850 area. On the 4-hour view, 0.5690 is pivotal support; losing it would risk a move to new lows.
What could derail NZD strength?
A strong upside surprise in U.S. labor data or a less-dovish-than-expected Fed could lift the dollar and weigh on NZD/USD. A clear break below 0.5690 would also be a bearish technical signal.
What events are traders watching next?
The FOMC decision is the main event, followed by the U.S. nonfarm payrolls and CPI reports. Ahead of the meeting, weekly jobless claims and labor indicators will set the tone for FX risk and volatility.
