The New Zealand Dollar (NZD) has been having a good run, Rabobank’s FX analyst Jane Folley reports.

NZD/USD is likely to struggle to rally in the weeks ahead

“In the year to date it is the second best performing G10 currency after the AUD. This is despite NZD/USD moving close to 0.5542 on January 13 which was its lowest level since October 2022. A key factor behind the emergence of a better tone in the NZD is growing confidence that the New Zealand economy will be able to move away from last year’s recessionary conditions and post an economic recovery in the year ahead.”

“That said, it is widely expected that this will necessitate further rate cuts from the RBNZ this year. Although some of the broadbased strength of the USD has been sapped this week by relief that tariffs have not be announced by President Trump in the first days after his inauguration, we expect the USD to remain firm in the year ahead.”

“This suggest that NZD/USD is likely to struggle to rally significantly in the weeks ahead. NZD/USD is currently positioned close to the 50-day SMA at 0.5524.  This is likely to offer resistance.”