The NZD/USD pair has risen for seven days straight, reaching its highest level since September 2025 due to a weaker US Dollar. During the European session, it remains steady around the 0.5965-0.5970 range, suggesting it could rise further. Technically, the pair broke through key resistance levels around 0.5750-0.5860, supporting a positive outlook. The Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) show increasing bullish momentum, even though the RSI is considered overbought at 75.8. Immediate resistance may come from the 78.6% Fibonacci retracement level at 0.6003.

Factors Influencing The Kiwi

The Kiwi, New Zealand’s Dollar, is influenced by its economy, central bank policies, and trade relations, especially with China. Changes in the dairy industry and economic data significantly impact the NZD’s value. The Reserve Bank of New Zealand (RBNZ) affects the NZD through its interest rate decisions, with rate hikes likely to boost its value. Market sentiment also plays a role, as the NZD tends to strengthen in positive market conditions and weaken during uncertainty. The NZD/USD pair is maintaining its upward trajectory after breaking through important technical barriers last week. The move above the 0.5900 level confirms a bullish outlook for the near future, largely driven by the weakening US Dollar. The pair currently trades at its highest point since September 2025.

Inflation And Dairy Prices

This trend is supported by differing expectations from central banks, which we see as a major factor. New Zealand’s Q4 2025 inflation rate was 4.7%, above the Reserve Bank’s target, indicating they may be cautious about cutting interest rates. Meanwhile, the latest US core PCE data from December 2025 dropped to a two-year low of 2.9%, raising expectations for Federal Reserve rate cuts in early 2026. Dairy prices, a key part of New Zealand’s economy, are also rising. The Global Dairy Trade Price Index increased by 2.3% in the first auction of this month. Since dairy is New Zealand’s main export, this boosts the currency’s value and reinforces the positive sentiment around the NZD. However, we must be wary of developments in China, which saw its manufacturing PMI decline for the third month in December 2025. As New Zealand’s largest trading partner, a slowdown in China could impact the Kiwi’s rally. This remains a significant risk to watch. With the RSI above 75, indicating overbought conditions, traders should be cautious about investing at these levels. A better strategy in the coming weeks might be to buy on dips towards the 0.5900-0.5915 range, aiming for a move towards the 0.6000 resistance level. Consider buying call spreads on dips to manage risk while keeping upside potential. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now