NZD/USD market analysis: RBNZ rate decision, FOMC minutes, and US PCE data (May 27, 2025)

Traders are closely monitoring the RBNZ meeting scheduled for Tuesday, May 27, 2025. Market consensus, based on Bloomberg analyst surveys, strongly anticipates a 25 basis point (bps) rate cut, bringing the official cash rate to 3.25%. This follows a previous 25 bps cut in April. Further RBNZ rate cuts are possible in 2025 due to global trade uncertainties and potential economic slowdowns. The recent New Zealand Employment Change Q/Q showed a 0.1% increase, as expected, though the previous quarter's data was revised downward. The New Zealand Unemployment Rate remained steady at 5.1%, better than the 5.3% forecast.

The release of the FOMC Minutes for the May 6/7 meeting on Wednesday can be significant for NZD/USD. Traders will seek insights into FOMC members' views on tariff impacts, inflation expectations, and the potential for slow growth and a weak labor market. The latest FOMC statement highlighted "risks of higher unemployment and higher inflation." Fed Chair Jerome Powell has emphasized prioritizing inflation over short-term growth. US Personal Income, Personal Spending, and Personal Consumption Expenditure (PCE) data are due Friday from the Bureau of Economic Analysis. The Core PCE Price Index M/M is expected to rise 0.1%, while the Y/Y is expected to decrease from 2.6% to 2.5%

Widening Pattern: The NZD/USD pair has exhibited a "widening pattern" formation since early 2025.

Price Range: Influenced by global trade tariff updates, and following a dip to 0.5530 (the lower boundary of the widening formation), the NZD/USD exchange rate surged to 0.6000 (the upper boundary).

Sideways Trading Range: Since late April 2025, NZD/USD price action has been trading within a defined range of 0.5830 to 0.6000, indicated on charts by blue lines.

Key Resistance Levels: The current NZD/USD price is testing a significant confluence of resistance:

• Upper level of the current trading range (around 0.6000)
• Daily pivot point at 0.6004
• Weekly R1 resistance at 0.6025

Potential Breakout: A break and close above these resistance levels could signal a bullish continuation, potentially turning the current range into a "flag formation" for the uptrend initiated in early April.

Critical Support Levels: A critical support zone exists:

• Weekly pivot point at 0.5950
• Convergence of moving averages: EMA9, SMA9, and SMA20

Overbought Indicators:

• Stochastic Oscillator has been in overbought territory since April, aligning with price action.
• Relative Strength Index (RSI) is also approaching overbought levels, reflecting current price momentum.

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