The Fed has stated that a rate hike in the next 1-2 months may not occur but remains confident of a rate cut later in the year, despite inflationary pressures in the first quarter.

Furthermore, the weakening labor market and rising unemployment rate have increased hopes of an earlier rate cut by the Fed in September. CME FedWatch shows a 67% chance of a rate cut in September.

The strength of the New Zealand dollar is beginning to taper off as investors anticipate the Reserve Bank of New Zealand (RBNZ) may accelerate rate cuts due to weak first-quarter labor market data.