NZD/USD Drops on Softer CPI Data, RBNZ Rate Cuts Expected

NZD/USD declined following New Zealand's softer-than-expected inflation data, reinforcing expectations for Reserve Bank of New Zealand rate cuts. The weaker CPI print has solidified market pricing for 37 basis points of easing by year-end, keeping downward pressure on the kiwi dollar. The softer inflation readings align with the RBNZ's recent dovish pivot, suggesting the central bank has room to ease monetary policy without risking inflation resurgence. This contrasts with the more hawkish stance from other central banks, particularly the Federal Reserve, creating a widening interest rate differential unfavorable for NZD. Technical analysis shows NZD/USD testing key support levels, with further downside likely if upcoming economic data continues to disappoint. The cross rate AUD/NZD has also seen movement, with the Australian dollar gaining relative strength despite RBA rate cut expectations, highlighting New Zealand's particularly weak economic position among commodity currencies.