The New Zealand dollar climbed back toward the 0.6100 level against the U.S. dollar on Tuesday, recovering from a two-week low as traders scaled back expectations for additional Federal Reserve rate hikes. According to CME Group’s FedWatch tool, futures markets now imply a near-zero probability of a move at the next FOMC meeting, reflecting softer U.S. inflation and a cooling labor market.
The kiwi’s rebound was supported by the Reserve Bank of New Zealand’s hawkish stance and improving dairy prices, a key export. Technical support around 0.6050–0.6080 held firm, while immediate resistance sits near 0.6150, with the next major hurdle at 0.6200. The RSI moved back above 50, signaling easing downside pressure.
Earlier in the week, New Zealand's BusinessNZ Performance of Manufacturing Index fell to 54.3 in July from a revised 59.7 in June. Although still above the 50.0 expansion threshold, the 5.4-point drop was one of the largest monthly declines in recent years. New orders and production weakened, while employment slipped into contraction, suggesting manufacturers are turning cautious.
The combined picture—a cooling manufacturing sector but a softer U.S. dollar—leaves the NZD/USD pair in a range-bound trend. If the Fed remains on hold and the RBNZ maintains its tightening bias, the interest rate differential could favor further kiwi gains, but any U.S. data reviving rate hike bets could quickly reverse the move.
