The NZD/USD currency pair is trading higher, climbing close to the psychologically significant 0.6000 level during early Asian trading hours on Monday. 

This upward momentum in the New Zealand Dollar (NZD) comes as the US Dollar (USD) faces selling pressure amid rising US trade protectionism, legal uncertainty, and renewed inflation concerns. TelaraX features a detailed take on this matter, straight from their broker team.

US Dollar Pressured by New Tariff Threats

The most immediate driver behind the USD weakness is the US President’s latest announcement regarding tariff escalation. Speaking at a campaign rally in Pennsylvania, the US President declared his intent to double tariffs on imported steel, raising them from the current 25% to 50%. 

This move is designed to shield the US steel industry from international competition and intensify his “America First” economic agenda. “We’re going to bring it from 25% to 50%, the tariffs on steel into the United States of America, which will even further secure the steel industry in the United States,” the US President stated, according to Reuters.

This policy announcement marks a significant escalation in trade tensions, raising fears among investors of another round of global trade wars that could slow global economic activity. The USD, typically seen as a safe-haven currency, is ironically under pressure here, as markets anticipate weaker global trade, softer US growth, and a more complicated inflation outlook.

Legal Turmoil Adds to Dollar Bearishness

Adding to the volatility, a US Court of Appeals ruling on Thursday temporarily reinstated the US President’s ability to impose these tariffs, contradicting an earlier judgment from the Court of International Trade in Manhattan. The latter had declared the US President’s executive orders, particularly the “Liberation Day” tariffs issued on April 2, as an overreach of presidential authority.

However, the Federal Circuit Court’s reversal has given legal room for the tariffs to be enforced, albeit temporarily. This legal back-and-forth injects fresh uncertainty into the US trade policy outlook, pushing the USD lower as traders unwind long-dollar positions and seek clarity on the future of US international trade relationships.

NZD Strength Bolstered by Central Bank Clarity

While the USD falters, the New Zealand Dollar is benefiting from both improving sentiment and policy clarity from the Reserve Bank of New Zealand (RBNZ). Last week, the RBNZ cut its Official Cash Rate (OCR) by 25 basis points, a move that brought interest rates into the neutral range of 2.5%–3.5%, according to Assistant Governor Karen Silk.

The RBNZ’s tone suggests a pause in the easing cycle, with a likely wait-and-see approach in upcoming months. This has led investors to scale back expectations of further near-term rate cuts, lending support to the NZD in the FX market. 

Moreover, stable policy expectations, especially in contrast with the uncertainty surrounding US fiscal policy, make the NZD more attractive for carry trade positions.

Technical Outlook: NZD/USD Nears Key Resistance

From a technical standpoint, NZD/USD has appreciated more than 0.50% since the start of Monday’s trading session, moving toward the 0.6000 resistance level, which is both psychological and chart-sensitive. A clean break above this threshold could trigger further upside momentum, especially if the USD continues to underperform amid risk sentiment shifts.

Key support levels are now observed around 0.5950 and 0.5900, with short-term moving averages turning bullish on the hourly chart. Momentum indicators such as the Relative Strength Index (RSI) and MACD are signaling continued upside potential, although the pair could face overbought conditions if US economic data later in the week surprises to the upside.

Macro Risks and Forward Guidance

Investors should monitor several critical variables going forward:

• US macroeconomic data releases (e.g., CPI, PPI, Non-Farm Payrolls), which could influence inflation expectations and Fed rate path speculation.
• RBNZ commentary, especially any shift in tone from neutral to dovish or hawkish, depending on the trajectory of domestic inflation and employment.
• Developments in global trade policy, particularly any response from key steel-exporting nations such as China, South Korea, and the EU to the proposed US steel tariff hikes.
• Legal developments regarding the validity of the US President’s tariff powers could ultimately determine whether the 50% steel import tax becomes permanent or not.

Conclusion

The rise in NZD/USD toward 0.6000 reflects a confluence of US Dollar softness, heightened tariff risk, and the RBNZ’s stable policy outlook. With traders increasingly risk-sensitive, any sign of escalation in the US trade agenda or policy inconsistency could prompt further USD selling, keeping the NZD/USD supported in the near term.

Nonetheless, as markets digest these developments, volatility is likely to remain elevated, and upcoming economic indicators and legal rulings will play a pivotal role in dictating the next directional leg for the pair. For now, the bullish bias remains intact as the USD struggles under geopolitical and economic weight, and the NZD finds footing in relative stability.