NZD/USD attempts to break key hurdle of 0.5870 ahead of Fed’s policy

The NZD/USD pair strives to extend its recovery move above 0.5870 during the European trading session on Wednesday. The Kiwi trades higher as the US Dollar (USD) struggles to gain ground ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades vulnerably near its three-day low around 99.50.

The US Dollar faces selling pressure even as the Fed is anticipated to hold interest rates steady in the range of 3.50%-3.75%. The speculation for the Fed leaving borrowing rates unchanged is upbeat, as higher oil prices due to energy supply concerns amid Middle East conflicts have prompted inflation expectations across the world.

As the Fed is almost certain to avoid any monetary policy adjustment, according to the CME FedWatch tool, investors will pay close attention to the Fed’s dot plot and Chairman Jerome Powell’s press conference to get fresh cues regarding the monetary policy outlook.

In Wednesday’s session, investors will also focus on the United States (US) Producer Price Index (PPI) data for February, which will be published at 12:30 GMT.

Meanwhile, the New Zealand Dollar (NZD) trades broadly firm as the market sentiment turns favorable for riskier assets. As of writing, S&P 500 futures trade sharply higher, signifying a risk-on market mood.

On the domestic front, investors await the Q4 Gross Domestic Product (GDP) data, which will be released on Thursday. The NZ GDP growth is estimated to arrive at 0.4%, lower than 1.1% seen in the third quarter of 2025.