NZD/USD Extends Slide as Dollar Firms Ahead of FOMC Minutes

Key Moments

Dollar Recovery Pressures NZD/USD

NZD/USD is trading around 0.5810 on Monday, at the time of writing, representing a 0.40% loss on the day and extending its losing streak to a third consecutive session. The pair remains under pressure as the US Dollar regains ground, retracing part of its earlier pullback largely on technical factors following a recent phase of weakness.

The renewed support for the Greenback is emerging despite what is described as a still-fragile fundamental backdrop. Market participants continue to assign value to the possibility of further interest rate cuts by the Federal Reserve in 2026, a view that could limit how far the US Dollar can extend its current rebound.

Focus Turns to FOMC Minutes and Fed Policy Outlook

Investor attention is now shifting to the publication on Tuesday of the Minutes from the Federal Open Market Committee’s December meeting. The document is expected to shed more light on internal discussions and the policy trajectory envisaged by the US central bank.

According to the CME FedWatch tool, market pricing currently suggests that the probability of interest rates remaining unchanged at the Fed’s January meeting is around 82%, an increase compared with the prior week. In contrast, the implied likelihood of a 25-basis-point rate cut has eased to about 18%.

In December, the Federal Reserve cut rates by 25 basis points, setting the target range at 3.50%-3.75%. This move followed a cumulative 75 basis points of rate reductions in 2025 in the context of a softening labor market and inflation that remains above target.

RBNZ Expectations Offer Underpinning for NZD

On the New Zealand side, the downside for NZD/USD may be cushioned. The New Zealand Dollar is drawing support from rising expectations that the Reserve Bank of New Zealand could move toward a rate increase. Recent macroeconomic indicators suggest that economic activity picked up in the third quarter, pointing to a mild recovery after an extended phase of weakness.

Within this backdrop, RBNZ Governor Anna Breman has signaled that policy rates are likely to stay at current levels for an extended period, while keeping open the possibility of an adjustment if economic conditions continue to improve.

In the near term, the trajectory of NZD/USD is therefore likely to hinge primarily on fresh signals from the Federal Reserve, while New Zealand’s monetary policy outlook may provide a layer of underlying support to the local currency.

New Zealand Dollar Performance Against Major Currencies

The following table summarizes the New Zealand Dollar’s percentage moves against major currencies today. The data indicate that the New Zealand Dollar has shown particular strength relative to the Australian Dollar.

The heat map should be read by selecting the base currency from the left-hand column and the quote currency from the top row. For instance, choosing the New Zealand Dollar as the base on the left and moving horizontally to the US Dollar column yields the percentage change for NZD (base) / USD (quote).