NZD/USD Continues Downward Trend Near 0.5950 Amidst Strong US Dollar Influence

Lead: In early Asian trading on Tuesday, the New Zealand Dollar (NZD) weakened against the US Dollar (USD), with the NZD/USD pair declining to approximately 0.5960, primarily driven by a buoyant USD and rising inflation expectations in New Zealand.

　　Main Body:

　　The NZD/USD pair extended its decline, reflecting broader market dynamics as the USD maintains its strength against various currencies, particularly the NZD. This downswing comes as traders and investors express concern over the potential for tariffs under Donald Trumps forthcoming administration, which could further complicate the inflation landscape in the US.

　　On Monday, the Reserve Bank of New Zealand (RBNZ) released its latest monetary conditions survey, indicating a rise in the country's two-year inflation expectations to 2.12% for the fourth quarter, up from 2.03% in Q3. Although this suggests growing inflationary pressures within New Zealand, the stronger USD has overshadowed this development, leading to negative sentiment surrounding the NZD.

　　According to the CME FedWatch Tool, market participants have adjusted their expectations regarding interest rate cuts by the US Federal Reserve (Fed). The likelihood of a 25 basis points cut in December has decreased from 75% last week to approximately 65.3%, while the chances of the Fed maintaining the current rates stand at 34.7%. These shifts indicate a potential tightening of monetary policy, which could further bolster the USD.

　　Investors are eagerly awaiting more insights from upcoming Fed speakers and the US Consumer Price Index (CPI) data for October, anticipating that any indications of rising inflation may reduce the odds of a December rate reduction, subsequently increasing the USDs comparative strength.

　　The weakening of the NZD is not purely attributed to external factors; it is also influenced by the internal economic climate. Recent data from New Zealand suggests vulnerability in retail spending and heightened living costs—elements that have significantly kept inflation on the minds of consumers and policymakers alike.

　　Moreover, the technical analysis indicates a bearish trend for the NZD/USD pair, with strong selling pressure as it trades below notable moving averages. The pair shows minimal potential for recovery unless it breaks above key resistance levels. Currently, immediate support levels to watch are set around 0.5900, with resistance lingering near 0.6000. A lack of robust bullish signals further reiterates a prevailing downward momentum in the market.

　　Conclusion:

　　As the NZD/USD currency pair hovers around 0.5950, traders should remain cautious and closely monitor economic signals from both the United States and New Zealand. With inflation expectations in New Zealand rising and the USD maintaining strength amidst geopolitical uncertainties, the trend suggests continuing bearish pressure on the NZD. Future developments in monetary policy and inflation metrics will be crucial in shaping the trajectory of the NZD/USD pair.