RBNZ Holds OCR at 3.25%, Signals Possible Cuts Ahead

The Monetary Policy Committee decided to keep the Official Cash Rate (OCR) unchanged at 3.25%. While annual consumer price inflation is expected to rise toward the upper end of the 1 – 3% target band by mid-2025, easing domestic inflation and spare capacity in the economy are projected to bring inflation back toward 2% by early 2026.

New Zealand's economic recovery is supported by elevated export prices and lower interest rates. However, global policy uncertainty and trade tariffs are expected to weigh on global growth, slowing New Zealand's recovery and easing inflation pressures. The Committee noted that future OCR decisions will depend on incoming data, particularly regarding the persistence of inflation and the pace of recovery. If medium-term inflation continues to ease as forecasted, further rate cuts may be warranted.

(NZD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the NZD/USD currency pair has been trending bullish since April 2025, as shown by the formation of higher highs and higher lows. Recently, the pair has been trading within an ascending channel and was rejected at the upper boundary. It may potentially decline further to retest the support zone at 0.5940 – 0.5955 and the lower boundary of the channel before determining its next directional move.

Yen Falls as Trump Renews Tariff Threats

The Japanese yen weakened on Tuesday after U.S. President Donald Trump reaffirmed plans to impose a 25% tariff on imports from Japan and South Korea, adding another layer of uncertainty to his ongoing and unpredictable trade war. Despite several rounds of negotiations, talks between the U.S. and Japan have yet to produce a breakthrough. With Japan's upper house election approaching this month, policymakers are now shifting their focus toward domestic political priorities.

In response to the escalating trade tensions, Japanese Prime Minister Shigeru Ishiba stated on Tuesday that he would continue pursuing negotiations with the U.S. to reach a mutually beneficial trade agreement. Meanwhile, Bank of Japan board member Junko Koeda noted that she is closely monitoring potential second-round effects on core inflation, particularly following recent price increases in staple goods like rice.

(USD/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/JPY currency pair has rebounded from the support zone of 142.10 – 142.70 recently, with strong bullish momentum and even broke above the order block of 144.60 – 145.10. Such a valid bullish movement might continue to push the pair upwards, potentially retesting the resistance zone of 147.70 – 148.20 to determine its next directional move.

Copper Rally Follows U.S. Tariff Plan

U.S. copper prices surged to a record high on Tuesday after President Donald Trump announced plans to impose a 50% tariff on imported copper, escalating his global trade war. U.S. Comex copper futures spiked over 12% following the announcement. Copper is a vital industrial metal used in electric vehicles, military equipment, power grids, and numerous consumer products, making the tariff particularly impactful across multiple sectors.

(Copper Daily Price Chart, Source: Trading View)

From a technical analysis perspective, copper prices have been trending bullish since April 2025, as evidenced by the formation of higher highs and higher lows. Recently, the price broke above the order block at 5.1500 – 5.2500 with strong bullish momentum, indicating that buying forces have taken control. This suggests that prices may continue to surge higher or potentially pull back to retest the order block before determining their next move.