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The New Zealand dollar has posted strong gains on Monday. Ahead of the North American session, NZD/USD is trading at 0.5912, up 0.53% on the day.

US dollar slips on Moody's downgrade

The US dollar is trading lower today against the major currencies, following a surprise downgrade to the US' credit rating on Friday. Moody's cut the long-term credit rating by on notch from "Aaa", the highest rating, to "Aa1". Moody's cited the country's "large annual fiscal deficits and growing interest costs". The move is largely symbolic as all other major credit rating agencies have pegged the US at "Aaa" and Moody's is simply joining the club. Still, investors have reacted by sending the US dollar broadly lower.

US Treasury yields jumped after Moody's decision. The 30-year Treasury yield jumped above 5% for the first time in six weeks and the 10-year yield pushed above 4.5%.

While Moody's was highlighting concerns over US fiscal policy, President Trump is pushing a bill that will provide massive tax cuts and further increase the US' debt. Currently, the debt stands at $36 trillion and Trump's bill would add $3 trillion to $5 trillion in debt.

China posts mixed data

In China, the week started with mixed data for April. Industrial production dropped to 6.1% from 7.7% but beat the market estimate of 5.5%. Retail sales fell to 5.1%, down from 5.9% and below the market estimate of 5.9%. Consumers are anxious about the economic uncertainty, especially the impact of the US-China trade war. The two sides have agreed to temporarily slash tariffs while they try to hammer out a trade deal which would go a long way at calming nervous investors.

NZD/USD Technical

• NZD/USD is testing resistance at 0.5911. Above, there is resistance at 0.5941
• 0.5888 and 0.5858 are the next support levels

NZDUSD 1- Day Chart, May, 19, 2025

Market Picture

On Monday, the cryptocurrency market declined more than 4% compared to the previous week. The bears successfully neutralised several attempts to cross the $3.36 trillion mark, which weakened the participants’ sentiment and led to the return of capitalisation to the $3.24 trillion level. The area down to $3 trillion could be an easy target for the bears, as the market may need a tactical pause to consolidate its strength.

The Cryptocurrency Market Sentiment Index stabilised over the weekend at 74, close to extreme greed territory and the highest values since late January. These readings leave room for growth for both the sentiment index and prices.

Bitcoin hit the $107K level on Monday morning, triggering an intensified sell-off and quickly pulling back below $102K. During the European session, BTC stabilised around $103K, close to the average level of the last 10 days ($103.4K). A failed growth attempt could lead to a short-term pullback to $97K.

News Background

Significant inflows into spot bitcoin ETFs in the US have continued for four consecutive weeks. According to SoSoValue, net inflows into spot BTC-ETFs totalled $603.7 million over the past week, the lowest in eight weeks. Cumulative inflows since bitcoin-ETFs were approved in January 2024 totalled $41.77 billion, while net inflows into ETH-ETFs totalled $41.6 million last week, rising to $2.51 billion since July 2024.

HTX Research noted that lower US inflation and increased institutional participation support the current rally in the cryptocurrency market. Nevertheless, when key technical support levels are broken, the current consolidation may lead to a local correction.

JPMorgan believes that Bitcoin is likely to outperform gold in the second half of the year, thanks to corporate buying and growing support from US states. The shift in sentiment has already been evident in the past three weeks, with capital shifting from precious metals ETFs to spot BTC-ETFs.

According to the Fireblocks survey, 90% of banks, financial institutions, fintech companies and payment services plan to use or are already using stablecoins, focusing primarily on cross-border payments. Among the advantages mentioned by respondents, the first place is occupied by faster settlements.

Daily Pivots: (S1) 145.01; (P) 145.56; (R1) 146.19; More...

Intraday bias in USD/JPY stays neutral at this point. Fall from 158.86 might have completed at 139.87 already. Further rise is in favor as long as 144.02 support holds. Above 148.64 will target 61.8% retracement of 158.86 to 139.87 at 151.60 next. However, firm break of 144.02 will bring retest of 139.87 low instead.

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In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8334; (P) 0.8368; (R1) 0.8408; More….

Range trading continues in USD/CHF and intraday bias stays neutral. On the downside, firm break of 0.8323 support will argue that corrective rebound from 0.8038 has completed at 0.8475, after rejection by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. Intraday bias will be back on the downside for 0.8184, and then retest of 0.8038 low. However, sustained trading above 0.8482 will dampen this bearish view and target 61.8% retracement at 0.8756 next.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8765) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Daily Pivots: (S1) 1.3242; (P) 1.3288; (R1) 1.3325; More...

Immediate focus is now on 1.3433/42 key resistance zone as rebound from 1.3138 resume. Decisive break there will confirm larger up trend resumption. On the downside, though, below 1.3249 support will extend the corrective pattern from 1.3442 with another falling leg.

In the bigger picture, up trend from 1.3051 (2022 low) is still in progress. Decisive break of 1.3433 (2024 high) will confirm resumption. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Nevertheless, sustained trading below 55 D EMA (now at 1.3102) will delay the bullish case and bring more consolidations first.

Daily Pivots: (S1) 1.1123; (P) 1.1171; (R1) 1.1212; More...

Immediate focus is now on 1.1292 resistance in EUR/USD as rebound from 1.1064 resumes. Decisive break there will indicate that correction from 1.1572 has already completed after defending 38.2% retracement of 1.0176 to 1.1572 at 1.1039. Intraday bias will be turned back to the upside for retesting 1.1572 next.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0818) holds.

Euro and Sterling surged today after the UK and EU unveiled a sweeping new agreement resetting their defence and trade relationship, the most substantial since Brexit in 2020. The comprehensive deal spans key sectors including security, energy, travel, trade, and fisheries. UK Prime Minister Keir Starmer hosted European Commission President Ursula von der Leyen in London for the high-stakes summit, highlighting the UK’s shift toward pragmatic diplomacy while respecting key post-Brexit red lines.

The UK Labour government was quick to clarify that this reset does not mark a reversal of Brexit. Officials emphasized that the agreement avoids returning to the EU single market, customs union, or freedom of movement. Still, the new deal is being hailed as a boost to corporate confidence and may pave the way for fresh investment flows into the UK, especially following other trade breakthroughs this month with the US and India.

While optimism lifted the Euro and Pound, US assets are under renewed pressure following last week’s credit downgrade by Moody’s. Dollar weakness was notable, with the greenback falling to the bottom of the major currency pack. Treasury yields, however, surged as bond markets reeled from the implications of a swelling fiscal deficit. 10-year yield broke through the key 4.5% level, while 30-year yield topped 5% for the first time in months.

Part of the angst stems from fresh momentum behind President Donald Trump’s multitrillion-dollar domestic policy package. Passed by the House Budget Committee on Sunday, the bill includes major increases in immigration and defense spending, along with an extension of the 2017 tax cuts. It’s now headed for floor debate later this week. Markets are interpreting this as a structural shift toward higher deficits, particularly as tariff revenue is unlikely to fully compensate for lost tax income.

In the currency markets, Euro leads the day’s gains, followed by Sterling and Aussie. Dollar is the weakest performer, trailed by Loonie and Swiss Franc. The Japanese Yen and New Zealand Dollar are trading more mixed.

Technically, GBP/USD is now in focus as it approaches key resistance level at 1.3433 (2024 high) again. Decisive break of 1.3433 will confirm resumption of whole up trend from 1.0351 (2022 low). Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004.

In Europe, at the time of writing, FTSE is down 0.44%. DAX is down -0.09%. CAD is down -0.74%. UK 10-year yield is up 0.059 at 4.706. Germany 10-year yield is up 0.057 at 2.645. Earlier in Asia, Nikkei fell -0.68%. Hong Kong HSI fell -0.05%. China Shanghai SSE closed flat. Singapore Strait Times fell -0.56%. Japan 10-year JGB yield rose 0.033 to 1.488.

Fed’s Bostic leans toward one rut in 2025 as inflation expectations turn concerning

Atlanta Fed President Raphael Bostic said on CNBC today that he currently favors just one interest rate cut this year, citing persistent inflation pressures and growing concern over shifting inflation expectations.

“I worry a lot about the inflation side,” Bostic said, noting that recent data shows expectations are beginning to drift upward again "in a troublesome way", which “will make our job harder.”

Eurozone CPI finalized at 2.2% in April, core at 2.7%

Eurozone headline CPI was finalized at 2.2% yoy in April. CPI core, which excludes energy, food, alcohol, and tobacco, accelerated, to 2.7%, up from 2.4% previously.

Services remained the primary driver of inflation, contributing 1.80 percentage points to the overall figure, followed by food, alcohol and tobacco at 0.57 pp. Energy continued to exert a dampening effect, subtracting -0.35 pp.

At the EU level, annual inflation was slightly higher at 2.4% yoy. Inflation disparities remained wide across the bloc, with France posting the lowest annual rate at 0.9% and Romania the highest at 4.9%.

BoJ's Uchida notes strain on consumers as food and import costs climb

BoJ Deputy Governor Shinichi Uchida noted in parliamentary remarks that recent inflation has been driven primarily by higher import and food costs, particularly staples like rice.

He acknowledged the burden on households, saying the price increases are “having a negative impact on people’s livelihood and consumption”. The bank remains prepared to continue raising rates if its current forecast holds.

However, Uchida stressed the “extremely high uncertainty” around global trade policies and their economic consequences. Given these risks, he emphasized that the BoJ would assess whether the economy and inflation align with projections before taking further steps.

China's retail sales growth slows to 5.1% in April, misses expectations

China’s economic data for April revealed a patchy recovery, with retail sales rising by 5.1% yoy, falling short of the 6.0% yoy forecast and slowing from March’s 5.9% yoy. Stripping out automobiles, consumer goods sales rose 5.6% yoy.

National Bureau of Statistics spokesperson Fu Linghui remained upbeat, saying that consumption momentum continues to build and will remain a key driver of economic growth.

On the production side, industrial output grew by 6.1% yoy, exceeding expectations of 5.7% yoy but decelerating from March’s robust 7.7% expansion. Meanwhile, fixed asset investment came in at 4.0% year-to-date, below the expected 4.4%.

NZ BNZ services slips to 48.5, sector remains under pressure

New Zealand’s services sector showed further signs of strain in April, with the BusinessNZ Performance of Services Index dipping from 48.9 to 48.5, well below the long-term average of 53.0.

Key components of the survey highlighted persistent weakness: activity/sales was stagnant at 47.3. Employment slipped back into contraction territory at 48.2. New orders showed only marginal improvement, rising from 50.8 to 50.9.

BNZ Senior Economist Doug Steel noted the PSI paints a more sobering picture than broader recovery narratives might suggest, highlighting that New Zealand’s services sector is underperforming relative to key global peers.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1123; (P) 1.1171; (R1) 1.1212; More...

Immediate focus is now on 1.1292 resistance in EUR/USD as rebound from 1.1064 resumes. Decisive break there will indicate that correction from 1.1572 has already completed after defending 38.2% retracement of 1.0176 to 1.1572 at 1.1039. Intraday bias will be turned back to the upside for retesting 1.1572 next.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0818) holds.

Atlanta Fed President Raphael Bostic said on CNBC today that he currently favors just one interest rate cut this year, citing persistent inflation pressures and growing concern over shifting inflation expectations.

“I worry a lot about the inflation side,” Bostic said, noting that recent data shows expectations are beginning to drift upward again "in a troublesome way", which “will make our job harder.”

USDJPY continues to descend for the fifth consecutive day, after a double upside rejection and a bull-trap at 148.49 Fibo barrier (76.4% of 151.15/139.88) contributed to the change of direction.

Weaker dollar (which acted as a safe haven on trade uncertainty) following relief on US-China trade agreement and signal that BoJ may resume with tightening (which boosts demand for yen) were the main drivers.

Bears eye pivotal support at 144.26 (50% retracement of 139.88/148.64 recovery leg, reinforced by daily Kijun-sen and bull-trendline off 139.88), loss of which would further weaken near-term structure and risk deeper drop.

The action remains weighed by falling thick daily cloud, daily MA’s in predominantly bearish configuration and long upper shadow weekly candle of last week which points to growing offers and potential formation of reversal pattern on weekly chart.

However, bears are likely to face increased headwinds at 144.26 support that may keep the price in consolidation before attempts through 144.26 trigger.

Near-term action is expected to remain biased lower while below daily Tenkan-sen (145.51).

Res: 145.30; 145.51; 146.10; 146.58
Sup: 144.26; 143.84; 143.23; 142.38

Cable jumped around a hundred pips on Monday morning, lifted by weaker dollar on surprise US credit rating downgrade and the latest EU/UK agreement on defense.

Fresh advance attempts to break above three-day congestion that would signal continuation of recovery from 1.3139 (correction low of May 12) which has already retraced 76.4% of 1.3444/1.3139 pullback.

Improving daily studies (MA’s returned to bullish setup / rising 14-d momentum is pressuring the centreline and on track to break into positive territory) while firmly bullish weekly studies add to the notion, particularly with bear-trap under Fibo support at 1.3163.

Close above 1.3400 zone (May 6 lower top / round-figure) is needed to validate fresh bullish signal and open way for retest of key barriers at 1.3443/44 (2024/2025 tops) where bulls are likely to face increased headwinds.

Res: 1.3402; 1.3444; 1.3500; 1.3557.
Sup: 1.3360; 1.3307; 1.3250; 1.3200.