• NZD/USD retreats sharply from a multi-week top after the RBNZ’s surprise 25 bps rate cut.
• Dovish Fed expectations and a positive risk tone undermine the USD, lending some support.
• Traders now look forward to the US consumer inflation figures before placing directional bets.

The NZD/USD pair witnessed a dramatic intraday turnaround from a four-week high touched earlier this Wednesday after the Reserve Bank of New Zealand's (RBNZ) surprise 25 basis points (bps) rate cut. Spot prices, however, manage to defend the 0.6000 psychological mark through the early part of the European session as traders keenly await the release of the US consumer inflation figures before placing fresh directional bets. 

The New Zealand Dollar (NZD) weakened across the board after the RBNZ board members decided to cut the Official Cash Rate (OCR) for the first time since March 2020 and indicated more cuts over the coming months. The central bank cited the recent progress towards meeting the annual inflation target and weak domestic economic growth behind the surprise move, which defied expectations. The dovish tilt turns out to be a key factor behind the NZD/USD pair's steep intraday downfall of over 80 pips.