28 May 2025,05:25
Daily Market Analysis
28 May 2025, 05:25
Key Takeaways:
*The RBNZ cut the rate by 25 bps as expected, and it has had a limited impact on the Kiwi.
*The market’s perception of a dovish tilt from the RBNZ throughout the year may continue to put pressure on the Kiwi.
On May 28, 2025, during the Sydney trading session, the Reserve Bank of New Zealand (RBNZ) announced a widely anticipated 25 basis point (bps) reduction in the Official Cash Rate (OCR), bringing it to 3.25%. This decision aligns with market expectations and reflects the RBNZ’s ongoing efforts to balance economic growth amidst rising global uncertainties. The accompanying statement from RBNZ officials adopted a more dovish tone than anticipated at the start of the year, highlighting concerns over escalating geopolitical risks and potential economic challenges stemming from shifts in U.S. trade policies.
The RBNZ’s rate cut and dovish forward guidance signal a continuation of an easing cycle aimed at supporting economic growth amid challenging conditions. Investors should remain vigilant for additional cues from upcoming RBNZ communications, as well as developments in global trade policies and geopolitical events, which could further influence the NZD’s trajectory. Key economic indicators, such as inflation, employment, and GDP growth, will also play a critical role in shaping the RBNZ’s future policy decisions.
The RBNZ’s decision to lower the OCR to 3.25% reflects a prudent response to global and domestic economic challenges. With a more dovish stance than anticipated, the central bank has set the stage for potential further rate reductions, which could impact the NZD’s performance in the coming months. Market participants are advised to closely monitor global developments and RBNZ communications for insights into the future direction of monetary policy and its implications for the New Zealand economy and currency.
Technical Analysis
NZD/USD, H4
The NZD/USD pair has declined by over 1% since Monday, pressured by a resurgent U.S. dollar and waning strength in the New Zealand dollar. Despite the pullback, the pair remains above its key uptrend support level, indicating that the broader bullish trajectory remains intact for now.
A recovery back to the 0.5960 resistance zone, which marks the previous high, would serve as a bullish confirmation, potentially reigniting upside momentum. However, technical indicators signal a pause in bullish strength: the RSI has slipped toward the neutral 50 level, retreating from earlier highs, while the MACD has formed a bearish crossover above the zero line, suggesting easing bullish momentum.
Overall, while the short-term pressure weighs on the pair, the uptrend remains valid as long as the pair holds above key support. A rebound above 0.5960 would be needed to re-establish a stronger bullish outlook.
Resistance levels: 0.5995, 0.6080
Support levels: 0.5915, 0.5855
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