NZD/USD drops 0.4% as New Zealand CPI misses expectations

NZD/USD declined 0.4% to 0.5920 during Monday's Asian session following weaker-than-expected New Zealand inflation data. The Q2 CPI rose 0.4% quarter-on-quarter, missing the 0.6% forecast, while annual inflation decelerated to 3.3% from 4.0% previously. The softer inflation reading increases the likelihood of more aggressive rate cuts from the Reserve Bank of New Zealand, with markets now pricing in a 50-basis-point reduction at the August meeting. The kiwi dollar found support at 0.5910, coinciding with the 50-day moving average, while resistance emerged at 0.5950. Technical indicators suggest further downside potential if support breaks, with the next target at 0.5880. The diverging monetary policy outlook between the RBNZ and other major central banks continues to weigh on NZD crosses, particularly against the USD which maintains its haven appeal.