NZD/USD remains subdued near 0.5700 ahead of US CPI data

• NZD/USD struggles amid broad risk aversion, driven by policy shifts from US President Donald Trump.
• The New Zealand Dollar faces headwinds as deflationary pressures in China deepen, weighing on market sentiment.
• Headline US CPI inflation is expected to ease in February after picking up momentum in January.

NZD/USD edges lower after registering gains in the previous session, trading around 0.5710 during the Asian hours on Wednesday. The pair faces headwinds amid broad risk aversion, driven by policy shifts by US President Donald Trump, particularly tariffs that increased the likelihood of a prolonged trade war.

On data front, Electronic card transactions in New Zealand rose by 0.3% to NZD 6,528 million on a seasonally adjusted basis in February 2025. Consumables saw a 0.6% increase, while apparel gained 1%. Fuel remained unchanged, showing no significant movement.

Additionally, the New Zealand Dollar (NZD) faces headwinds as deflationary pressures in China intensify. February saw the steepest decline in consumer prices in 13 months, alongside the 29th consecutive monthly drop in factory-gate prices. Given China’s role as New Zealand’s largest trading partner, these developments have dampened market sentiment.

However, the downside of the NZD/USD pair may be limited as the US Dollar (USD) faces headwinds amid concerns over a potential economic slowdown in the United States (US). US President Donald Trump described the economy as being in a "transition period," which investors interpreted as an early sign of possible turbulence ahead.

With the Federal Reserve in its blackout period ahead of the March 19 meeting, central bank commentary will be minimal this week. Traders are shifting their focus to February’s US Consumer Price Index (CPI) release on Wednesday for further insights into inflation trends.