The NZD/USD reached a high not seen in nearly three weeks during the Asian session but remains under the 0.5800 mark. It has found support and is recovering from the lower range of 0.5730-0.5725, its lowest level since April.

Recent USD Movement

The USD is gaining strength as traders reduce their negative bets ahead of a likely 25-basis-point rate cut by the Federal Reserve. Although expectations for a softer Fed and concerns about the US economy persist, the rising USD is weighing on the NZD/USD pair. The central bank is expected to announce an interest rate reduction, with further cuts anticipated in December. Everyone will be closely watching the details from the meeting and comments from Fed Chair Powell for clues about future rate cuts. Progress in US-China trade talks is easing fears of a trade war, which helps support currencies like the Kiwi. This optimism balances out the RBNZ’s inclination to cut rates further, which could boost the NZD/USD pair. The USD is performing well against the British Pound but is mixed against other major currencies. Recently, it has risen by 0.14% against the EUR and GBP, but has shown different trends against the CAD, AUD, JPY, and CHF.

Future Outlook for NZD/USD

We expect the NZD/USD pair to show a positive trend, staying around 0.6185 but having difficulty breaking the crucial 0.6200 resistance level. This uncertainty comes as traders balance optimistic global trade sentiments against a slightly strengthening US Dollar. Overall, the outlook suggests a favorable path remains for the Kiwi. The US Dollar is gaining some temporary support as we approach the Federal Reserve’s final meetings of the year. Following a weaker-than-expected Q3 2025 US GDP growth figure of just 0.8%, markets are anticipating a greater than 70% chance of a 25-basis-point rate cut at the December meeting. Traders are cautiously holding dollars for now, waiting for clearer signals from Fed officials in the coming weeks. Renewed optimism around the Indo-Pacific Economic Framework (IPEF) trade talks is bolstering the New Zealand dollar, helping to alleviate worries about a global slowdown. This positive trade news helps to offset the RBNZ’s dovish stance, particularly as they are ready to cut rates if domestic inflation, currently at 3.2%, drops too fast due to global challenges. For now, good news in trade is giving the Kiwi an uplift. The current market situation feels reminiscent of late 2019 when the market also anticipated Fed rate cuts amidst positive US-China trade sentiment, which drove the NZD/USD higher. Historical patterns indicate that a dovish Fed combined with optimistic risk sentiment tends to favor antipodean currencies. Given this environment, traders could consider positioning for a potential breakout above 0.6200 in the coming weeks. Purchasing NZD/USD call options with a January 2026 expiration offers a chance to profit from a rally if the Fed maintains its dovish approach, while minimizing downside risk. Conversely, if trade discussions stall, traders might explore put options or sell the Kiwi against a stronger currency like the Canadian Dollar as a form of protection. Create your live VT Markets account and start trading now.

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