While global markets welcomed the 90-day tariff ceasefire between Washington and Beijing, the New Zealand Dollar failed to capitalize on improved risk sentiment. The NZD/USD exchange rate remained trapped near the psychologically significant 0.5900 level during Monday's European session, reflecting persistent bearish pressure.
The joint statement from Geneva negotiations confirmed a temporary suspension of 24 percentage points in US tariffs on Chinese goods. Treasury Secretary Scott Bessent characterized this as "a significant de-escalation" that establishes a 90-day window for further negotiations. However, currency traders appeared more focused on the unresolved fentanyl issue mentioned by Trade Representative Jamieson Greer.
Money markets now price in approximately 75 basis points of additional easing from the Reserve Bank of New Zealand through 2025. Recent economic indicators showing softening wage growth and employment conditions have reinforced expectations for imminent policy accommodation. Analysts note this monetary policy divergence with the Fed continues weighing on NZD crosses.
The pair's inability to sustain moves above 0.5950 suggests ongoing bearish dominance. Key support levels to watch include the 2025 low near 0.5875, while resistance appears firm around the 0.5980-0.6000 zone. The relative strength index (RSI) hovering near oversold territory indicates potential for short-term consolidation before the next directional move.
Among G10 currencies, the Kiwi dollar has shown particular vulnerability to shifts in global risk appetite. While the trade truce initially supported commodity-linked currencies, the NZD's underperformance against both the USD and AUD highlights its sensitivity to domestic monetary policy expectations.
Market participants will closely monitor upcoming RBNZ communications for confirmation of dovish policy intentions, which could extend NZD weakness beyond current levels. The temporary nature of the US-China trade agreement also leaves room for renewed volatility should negotiations stall before the 90-day deadline.