The NZD/USD is under pressure as a group of Republicans challenge universal federal guarantees.

Investors are cautious ahead of the FOMC meeting: raising interest rates by 25 basis points or suspending them.

The New Zealand Federal Reserve follows the Bank of Japan and refuses the Federal Reserve's swap limit offer.

The NZD/USD is under pressure due to headline news reporting that tough US Republicans oppose bank deposit guarantees exceeding $250000.

Some Republicans suggest that the Federal Reserve (Fed) should abolish its extraordinary financing facilities, believing that universal guarantees for all bank deposits have set a dangerous precedent and encouraged future irresponsible behavior.

According to earlier reports, due to deteriorating bank conditions, some banking groups have requested the Federal Deposit Insurance Corporation (FDIC) to provide universal guarantees for all bank deposits. Bloomberg reported on Monday that US officials are considering expanding the coverage of FDIC to all deposits, a measure implemented during the 2008 crisis but now requires congressional approval.

On Monday, the market was boosted by various liquidity options, such as swap lines, the merger of UBS and Credit Suisse, and potential FDIC delays. However, it seems that FDIC may struggle to cover all bank deposits, which may be a major setback for depositors.

As the FOMC meeting approaches, investors are still divided on whether to expect a 25 basis point (bps) interest rate hike or suspend the hike. At present, the market tends to raise interest rates by 25 basis points.

Regarding the swap limit established by the Federal Reserve, the Reserve Bank of New Zealand (RBNZ), along with the Bank of Japan (BoJ), stated that there is no immediate need for a swap limit.

Previously, New Zealand released trade balance data for February, with exports of $5.23 billion, lower than the previous $5.47 billion, and imports of $5.95 billion, compared to $7.42 billion.