NZD/USD slides further below 0.5700 in reaction to RBNZ’s supersized rate cut

• NZD/USD drifts lower for the second straight day after the RBNZ’s expected 50 bps rate cut. 
• Concerns about Trump’s reciprocal tariffs and trade war fears further weigh on the Kiwi. 
• Subdued USD price action could lend support to the pair amid a generally positive risk tone.

The NZD/USD pair attracts some sellers for the second straight day and drops to a three-day low, around the 0.5680-0.5675 area after the Reserve Bank of New Zealand (RBNZ) announced its policy decision this Wednesday.

As was widely expected, the RBNZ lowered the Official Cash Rate (OCR) by 50 basis points (bps) from 4.25% to 3.75% following the conclusion of the February policy meeting. Moreover, the accompanying monetary policy meeting minutes indicated that the committee has scope to lower the OCR further through 2025. This, in turn, exerts some downward pressure on the New Zealand Dollar (NZD) and drags the NZD/USD pair away from a nearly two-month top touched earlier this week. 

The US Dollar (USD), on the other hand, struggles to capitalize on the previous day’s positive move amid expectations that the Federal Reserve (Fed) would cut interest rates further this year. Apart from this, a generally positive tone around the equity markets caps the safe-haven Greenback and could offer some support to the risk-sensitive Kiwi. That said, worries about US President Donald Trump’s reciprocal tariffs might hold back bulls from placing fresh bets around the NZD/USD pair.