The New Zealand Dollar (NZD) may continue to drop, with the next support level at 0.5730. Recently, the currency hit a low of 0.5759, indicating it might fall further. In the short term, the NZD must stay below 0.5800 to keep its downtrend. There is slight resistance at 0.5785, and a significant resistance level is expected at 0.5830 in the coming weeks.

Negative Outlook for NZD

The outlook for the NZD remains negative as it broke through the 0.5775 level faster than anticipated. Analysts will be watching to see if the NZD can drop below 0.5730 next. Investing in foreign exchange carries risks and uncertainties. FXStreet provides market commentary, not investment advice. Readers should do their own research and consider their financial situations before making trading decisions. The analysis reflects the authors’ views and not necessarily those of FXStreet. Any mistakes or inaccuracies are acknowledged, and FXStreet is not responsible for any potential financial losses.

Key Factor: Policy Divergence

Our negative perspective on the New Zealand dollar continues for the next few weeks, focusing on the important support level at 0.5730. This is supported by recent data showing New Zealand entered a technical recession in the second quarter of 2025, with GDP contracting by 0.2%. The strong downward pressure suggests further declines may happen, even though the currency is currently oversold. The difference in policies between central banks is a key factor behind this trend. In its September 24th meeting, the Reserve Bank of New Zealand indicated a more cautious approach, while the US Federal Reserve remains aggressive, leaving the door open for another rate hike this year. This growing gap in interest rates makes holding US dollars more appealing than the kiwi dollar. For derivative traders, this means positioning for further weakness while the NZD/USD stays below the solid resistance level of 0.5830. Buying put options with strike prices at or below 0.5750 could be a good strategy if the next support breaks. Any short-term rallies toward 0.5800 might provide better entry points for new short positions, given the current oversold conditions. Looking ahead, if the support level at 0.5730 fails, history suggests there could be more declines. In early 2020, similar support levels were broken, leading the pair to test the 0.5500-0.5600 range. This historical context underscores the potential for further downside if global economic challenges continue. Create your live VT Markets account and start trading now.

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