The AUD/NZD pair is currently strong, hovering near its highest point since September 2022. This strength follows the Reserve Bank of Australia’s (RBA) decision to keep interest rates steady. The pair has risen positively for seven days straight, trading above the mid-1.1400s with a daily gain of 0.15%.
The RBA decided to maintain rates after an unexpected rise in inflation. New forecasts predict inflation will reach 3.7% by mid-next year and drop to 2.6% by the end of 2027. This outlook has reduced the likelihood of a rate cut next year, helping the Australian Dollar (AUD) strengthen against the New Zealand Dollar (NZD).
New Zealand Rate Expectations
In New Zealand, traders expect a possible rate cut at the RBNZ meeting on November 26. This expectation partly stems from US tariffs that are affecting the economy. Despite showing signs of being oversold, the AUD/NZD pair is likely to keep climbing, with any pullback seen as a chance to buy.
The upcoming RBA interest rate decision will draw attention since a hawkish or dovish approach can impact the Australian Dollar. The current interest rate remains unchanged at 3.6%, meeting market expectations from prior releases.
There is a noticeable divide between the Australian and New Zealand central banks, suggesting that the AUD/NZD pair will continue to gain strength. The RBA kept rates steady at 3.6% today but expressed concerns about inflation, which unexpectedly rose to 3.9% annually in the last Q3 2025 report. This divergence creates a strong case for holding long positions in the Aussie against the Kiwi in the coming weeks.
Investment Strategy Considerations
In contrast, market expectations indicate a high chance of a rate cut by the RBNZ on November 26. This perspective is backed by recent data indicating minimal growth in New Zealand’s economy, with Q3 2025 GDP at just 0.1%. Such economic challenges are putting pressure on the Kiwi.
For the next few weeks, buying AUD/NZD call options seems like a straightforward way to target a move towards the 1.1500 level. This strategy lets you benefit from potential gains while limiting risk to the premium paid. Choosing options that expire after the November 26 RBNZ meeting could capture possible volatility from that event.
It’s important to note that the pair is technically overbought after a seven-day rise. A slight pullback towards the 1.1400 level may provide a better entry point for new long positions or for selling NZD call options against the Aussie. Taking this patient approach can help manage entry risk.
Our optimistic outlook is reinforced by recent CFTC data, which shows that speculative traders are increasing their net long positions in the Australian dollar. This current divergence in policy contrasts sharply with 2022, when central banks generally raised rates simultaneously. Today’s split offers a clearer directional opportunity for the AUD/NZD pair.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
