The New Zealand Dollar (NZD) may decline to around 0.5720, according to FX analysts at UOB Group. Currently, it faces some downward pressure and could aim for a target of 0.5700 in the long run. In the short term, the expected sideways trading range of 0.5750 to 0.5790 was disrupted by a rise to 0.5788, followed by a drop to 0.5727. Even though there is increased downward momentum, further declines below 0.5720 seem unlikely right now. Resistance levels are at 0.5760 and 0.5775.

Medium Term Forecasts

Looking at the medium term, forecasts from October 29 predicted a possible rise above 0.5800, though holding that level could be tough. After reaching 0.5801 and then pulling back, the NZD is now expected to trade between 0.5730 and 0.5805. The slight increase in downward momentum suggests a potential test of 0.5700, with another support level at 0.5720. If it breaks above 0.5790, current downward pressure could lessen. We are seeing more downward pressure on the NZD/USD after it couldn’t stay above 0.5800 earlier this week. A test of the 0.5720 support level seems likely soon. This indicates that traders should lean toward a bearish outlook, with a possible decline toward 0.5700 over the next few weeks. This view is strengthened by New Zealand’s latest Q3 CPI data, which came in at 1.8%, below the 2.1% forecast. This has lowered expectations for any immediate rate hikes from the Reserve Bank of New Zealand (RBNZ). The market is now predicting a more cautious RBNZ stance until early 2026, which supports a weaker Kiwi dollar.

US Dollar Policy Divergence

Meanwhile, the US dollar remains strong, aided by last month’s solid non-farm payrolls report, which showed an increase of 250,000 jobs. This keeps the Federal Reserve on a hawkish path, creating a clear policy divergence with the RBNZ. This divergence is a significant factor contributing to potential weakness in the NZD/USD pair. Given the rising downward momentum, buying put options with a strike price around 0.5700 could be a good strategy for those expecting a decline. Alternatively, those anticipating a more gradual drop might consider selling call options with a strike above 0.5790 to collect premiums. This resistance level is important; breaking above it would indicate that the downward pressure has lessened. We have seen a similar pattern in the past. In the second quarter of 2024, the pair also struggled to maintain a break above a key resistance level, leading to several weeks of decline. This historical trend suggests that the recent failure at 0.5801 could signal significant bearish trends for the medium term. Create your live VT Markets account and start trading now.

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