The NZD/USD pair rose by 0.35%, reaching around 0.5675 during the European trading session on Friday. This increase came as the US Dollar weakened due to delays in key US economic data caused by a government shutdown. The US Dollar Index (DXY) was close to its two-week low, trading at about 99.00.
A table outlines the percentage change of the US Dollar against major currencies, showing it was weakest against the New Zealand Dollar. Traders have changed their expectations for the Federal Reserve’s December meeting, looking to curb inflation. Although the NZD is climbing, its growth may be limited due to anticipated interest rate cuts by the Reserve Bank of New Zealand, given low job demand.
NZD In A Falling Channel
NZD/USD has been following a Falling Channel trend for two months, displaying an overall bearish sentiment. The 20-day EMA around 0.5700 serves as resistance, and the RSI is at nearly 40.00. If the RSI falls below 40.00, further bearish movement could occur. Should the pair drop below 0.5635, it may fall to 0.5600 or the April low of 0.5485. On the other hand, breaking through the 0.5731 level could lead to an increase to 0.5800 or the October 7 high of 0.5853.
The New Zealand Dollar has recently shown some strength against the US Dollar, climbing to around 0.5675. This rise appears to be short-term, driven mostly by US Dollar weakness, rather than a fundamental shift in trends. In the coming weeks, this increase should be viewed as a chance to prepare for a decline in the pair.
Our bearish outlook stems from the differing paths of the two central banks. The Reserve Bank of New Zealand is expected to lower interest rates by the end of this year, which usually weakens a currency. In contrast, Federal Reserve officials are indicating that they will maintain rates to fight inflation, which supports the US Dollar.
Technical Analysis Of NZD/USD
Recent data backs this perspective. New Zealand’s economy is showing signs of slowing, with Q3 2025 GDP figures revealing a contraction of 0.2%. Simultaneously, US inflation data for October 2025 shows core inflation stubbornly remains at 3.5%, far above the Fed’s 2% target, leaving them with little reason to consider rate cuts.
From a technical standpoint, the NZD/USD pair remains in a clear downward channel established over the last two months. The price is nearing a key resistance level at the 20-day moving average around 0.5700. This level has regularly capped rallies, suggesting that selling pressure may re-emerge here.
For derivative traders, this situation indicates that buying put options on the NZD/USD could be a smart strategy. This approach allows us to profit from a possible decline while limiting our risk to the premium paid for the option. We aim for the price to return towards the 0.5600 level, and a drop below that could lead to the 0.5485 lows seen in April 2025.
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