New Zealand Dollar after RBNZ raises OCR by 25 bps to 2.75%

The NZD/USD pair tumbles to near 0.5855 during the Asian trading hours on Wednesday. The New Zealand Dollar (NZD) faces some selling pressure against the US Dollar (USD) after the Reserve Bank of New Zealand (RBNZ) interest rate decision. Traders brace for the US August employment report, which will be published later on Friday.

As widely expected, the RBNZ decided to raise its Official Cash Rate (OCR) by 25 basis points (bps) to 2.75% from 2.50% after concluding the August monetary policy meeting on Wednesday.

According to the Monetary Policy Review (MPR), the committee judges that gradually removing monetary stimulus is appropriate to return inflation to the 2% target midpoint while supporting growth and employment.

The New Zealand central bank further stated that this decision reduces the risk that the OCR needs to increase by more later, adding that future policy decisions will depend on policymakers judgement of the balance of risks to medium-term inflation.

Traders will closely monitor RBNZ Governor Dr. Anna Bremans post-monetary policy meeting press conference at 03:00 GMT for more clues about the interest rate hike outlook this year.

Attention will shift to US jobs data on Friday, which could offer hints about the Federal Reserve (Fed) policy outlook. Economists expect a rebound of 58,000 jobs in August, while Unemployment Rate is projected to hold steady at 4.1% during the same period. Any signs of improvement in the US labour market could reinforce the expectation of an interest rate hike from the Fed in September and underpin the Greenback against the NZD.

Analysts at ING warn that the New Zealand Dollar remains vulnerable, reiterating that “we see some downside risks for NZD” as current market expectations appear misaligned with the Reserve Bank of New Zealands guidance. They note that market pricing of “95bp by June 2027 looks way too hawkish,” arguing that to justify such a path “the Reserve Bank would need to revise rate projections materially higher,” given that existing projections “currently embed only another 25bp hike for the next three quarters.”

In the daily chart, NZD/USD is consolidating in a neutral tone, holding just above the 100-day simple moving average (SMA) yet still trading beneath the 20-day Bollinger middle band, which hints at a mild corrective phase within the broader recovery. The Relative Strength Index (14) has slipped toward 44, suggesting fading bullish momentum as price oscillates around medium-term trend support.

On the topside, initial resistance is located at the Bollinger middle band around 0.5910, with the upper band near 0.5985 acting as a secondary cap if buyers regain control. On the downside, immediate support is clustered around the current area, with the 100-day SMA at 0.5845 backed by the lower Bollinger band near 0.5830; a decisive break beneath this zone would expose a deeper pullback, while holding above it would keep the pair broadly supported for another attempt toward the 0.5910 region.