• NZD/USD struggles as the US Dollar recovers intraday losses on technical grounds.
• Traders await Tuesday’s FOMC December Meeting Minutes for insight into the Fed’s 2026 outlook.
• The New Zealand Dollar may gain support as expectations strengthen for an RBNZ rate hike.

NZD/USD remains subdued for the third successive session, trading around 0.5830 during the Asian hours on Monday. The pair edges lower as the US Dollar (USD) recovers daily losses on technical grounds. However, the downside of the pair could be restrained as the US Dollar (USD) could struggle amid the ongoing likelihood of two more rate cuts by the Federal Reserve (Fed) in 2026.

Traders will likely observe the Federal Open Market Committee (FOMC) December Meeting Minutes due on Tuesday, which may shed light on internal policy debates shaping the Fed’s outlook for 2026. The CME FedWatch tool shows an 81.7% probability of rates being held at the Fed’s January meeting, up from 77.9% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 18.3% from 22.1% a week ago.

The Federal Reserve lowered the interest rates by 25 basis points (bps) at the December meeting, bringing the target range to 3.50%–3.75%. The Fed delivered a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.

The NZD/USD pair may also appreciate as the New Zealand Dollar (NZD) could find support from stronger expectations of a rate hike by the Reserve Bank of New Zealand (RBNZ). Recent data showed the economy rebounded in the third quarter, reinforcing signs of a modest recovery after a prolonged period of weakness. RBNZ Governor Anna Breman also noted that interest rates are likely to remain at current levels for some time.