The outlook for the NZD has become more negative, according to analysts. The currency will only stabilize if it breaks the strong resistance level at 0.5820.

Market Observations and Insights

The FXStreet Insights Team shares market observations from experts and analysts. They cover various global market updates about gold, cryptocurrency, and more, showing how quickly markets can change. Legal disclaimers warn about investment risks, stating that market information is for news purposes only and not investment advice. FXStreet and the author do not offer personalized recommendations and are not responsible for any mistakes or losses. After bouncing back from being oversold, we expect the NZD/USD to consolidate in the short term. This means the pair will likely trade in a narrow range, likely between 0.5760 and 0.5805, for the next few days. Any small increases shouldn’t be seen as a change in the overall trend.

Economic Data Impact

The outlook for the next one to three weeks remains negative, suggesting that any short-term strength could be an opportunity to sell. We should consider selling or buying puts when prices rise towards the 0.5820 resistance level. If the price drops below the recent low of 0.5738, it would confirm a downtrend, with the initial target at 0.5690. This negative outlook is supported by recent economic data from New Zealand. On October 7th, the Global Dairy Trade auction reported a 1.8% drop in whole milk powder prices, continuing a trend of falling export revenues. Last week’s inflation data was slightly lower than expected at 2.9%, which eases the pressure on the Reserve Bank of New Zealand to keep a tough stance. In contrast, the US Dollar is strong due to a general risk-averse sentiment that has emerged since the US government shutdown started last week. A solid US jobs report from September showed 210,000 jobs added, reinforcing the Federal Reserve’s stance to keep interest rates high. The difference between a steady Fed and a potentially easing RBNZ creates downward pressure on the NZD/USD pair. Historically, looking back to late 2024, the pair struggled to hold above the 0.6000 level, indicating a long-term downtrend. If we break the 0.5690 support, we might revisit the multi-year lows reached in the third quarter of 2023. Thus, derivative strategies should prepare for continued weakness after this consolidation phase ends. Create your live VT Markets account and start trading now.

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