• The New Zealand Dollar appreciates for an eighth consecutive day against the US Dollar.
• Inflation in New Zealand exceeds the central bank’s target, reviving expectations of monetary tightening.
• A drop in US Consumer Confidence and political uncertainty weigh on the US Dollar.

NZD/USD trades around 0.6015 on Tuesday at the time of writing, up 0.65% on the day, extending a streak of eight consecutive gains and reaching its highest level since July 2025. The pair draws solid fundamental support from both favorable domestic developments in New Zealand and a broad-based weakening of the US Dollar (USD).

In New Zealand, Statistics New Zealand reports that annual consumer inflation accelerated to 3.1% in the fourth quarter, above the Reserve Bank of New Zealand’s (RBNZ) target band. This upside surprise in inflation reinforces market expectations that the central bank may raise interest rates later this year, lending support to the New Zealand Dollar (NZD). Investors remain cautious ahead of the release of December trade data due on Wednesday, with forecasts pointing to a subdued balance. Attention is also on China, New Zealand’s largest trading partner, which is set to publish its 2025 industrial profit figures after very weak growth over the January-November period and a sharp contraction in November.

On the US side, the US Dollar remains under pressure following a further deterioration in household sentiment. The Conference Board reports that its Consumer Confidence Index fell to 84.5 in January from 94.2 previously, marking its lowest level since 2014. The decline reflects worsening assessments of both current conditions and expectations, with the Expectations Index remaining well below the threshold typically associated with recession risks. This weakness in consumer sentiment adds to signs of a gradual slowdown in the labor market and strengthens the view that the Federal Reserve (Fed) could adopt a more accommodative stance later this year.

Against this backdrop, the US Dollar Index (DXY) stays on the back foot below the 97.00 mark, weighed down by political uncertainty, concerns surrounding a potential government shutdown, and renewed debate over the independence and future leadership of the Fed. This environment encourages investors to rotate into other G10 currencies, including the New Zealand Dollar, allowing NZD/USD to maintain a clearly bullish short-term momentum.