In fact, the rates market is pricing in nearly two rate cuts for the remainder three meetings by the RBNZ for this year now. The first full rate cut is priced in for October, with odds of an August move also bumped up to ~60% currently. Traders are seeing ~46 bps of rate cuts by year-end. So, how did that weigh on the kiwi?

NZD/USD daily chart

NZD/USD was brought lower from 0.6128 to a low of 0.6075 on the decision earlier. In case you missed it:

The pair has bounced back a little to around 0.6090 levels now but essentially, buyers are still holding on in the bigger picture.

At the end of last month, we saw the downside price action test the 100 (red line) and 200-day (blue line) moving averages. And that is also where we are seeing price action move close to now.

The confluence of the key levels is seen at 0.6071-73 currently. Hold above that and buyers are still staying in the game. But break below and sellers will have renewed conviction in search for a further downside. The end June and early July lows at 0.6047-57 will also be one to watch.

The divergence between the kiwi and the dollar is evident by the stance between the two central banks currently. While the RBNZ is teeing up rate cuts for later this year, the Fed is holding steadfast with Powell reaffirming a more on hold stance yesterday.

That could exacerbate more near-term downside for NZD/USD, although we still have the US CPI report coming up later this week.