The NZD/USD pair is currently trading around 0.5730 and may be poised for a bullish reversal within a descending wedge pattern. The 14-day Relative Strength Index (RSI) is just above 30, showing a bearish trend. Meanwhile, the pair’s short-term momentum is weak as it remains below the nine-day Exponential Moving Average (EMA).

Key Support and Resistance Levels

The main support level is at the psychological mark of 0.5700, with additional support near 0.5670. If the price breaks below the wedge, the bearish trend could gain strength, targeting around 0.5485, the lowest level since March 2020. The key resistance levels to watch are the nine-day EMA at 0.5745 and the upper wedge boundary at 0.5770. If the price breaks above this area, it could shift to a bullish outlook, potentially driving the pair toward the 50-day EMA at 0.5842, or even up to a three-month high of 0.6008 reached in September. The heat map illustrates percentage changes of major currencies, showing that the New Zealand Dollar has mixed results against others. It performed better against the Australian Dollar but was weaker against the US Dollar and Euro. As of October 17, 2025, the NZD/USD is trading at about 0.5730, positioned within a descending wedge pattern that indicates a significant price shift may be coming. This technical setup, along with weakening bearish momentum, suggests we should prepare for a potential breakout. Strategies that benefit from a spike in volatility may be especially useful in the upcoming weeks.

Bearish and Bullish Scenarios

The bearish case remains strong if the price stays below key moving averages. If the pair breaks below the psychological support at 0.5700, it could fall to the lower boundary of the wedge at 0.5670, potentially retesting the April 2025 lows near 0.5485. This outlook is backed by recent data, like a 5% decline in the latest global dairy auction and a slowdown in New Zealand’s Q3 inflation to 4.2%, which reduces pressure on the Reserve Bank of New Zealand to raise interest rates. On the other hand, if the price moves above the nine-day EMA at 0.5745 and the wedge’s upper resistance near 0.5770, it would indicate a bullish reversal. This might trigger a rally towards the 50-day EMA at 0.5842. Traders could consider buying call options with strike prices above 0.5800 to take advantage of such an upward movement. This year’s broader trend has been influenced by differing monetary policies, which we expect to continue. The recent US non-farm payroll data for September exceeded expectations, keeping the Federal Reserve on a hawkish trajectory. Conversely, New Zealand’s economic indicators are softening, limiting the RBNZ’s options. Given the uncertainty about the breakout’s direction, a long strangle strategy could be a smart choice. This involves buying an out-of-the-money call option and an out-of-the-money put option with the same expiration date. This strategy allows for profit from a significant price movement in either direction while limiting risk to the premium paid. Create your live VT Markets account and start trading now.

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