The New Zealand Dollar has recently pulled back from its peak of 0.5800 against the US Dollar, now holding above 0.5750. The US Dollar has regained some strength as investors grow cautious ahead of the upcoming Federal Reserve meeting. The NZD/USD is facing a tough resistance zone around 0.5800. Bulls are finding it hard to push through levels at 0.5805 and 0.5850. Market sentiment is turning cautious, partly due to recent comments from the Chinese Foreign Minister and the anticipated US monetary policy decision.

Positive Trend

Since mid-October, the NZD/USD has shown a positive trend, bouncing back from lows of 0.5680. However, strong resistance remains in place. To aim for a higher target of 0.5915, the pair needs to break through the key resistance levels at 0.5800 and 0.5850. This would mark a reversal of the bearish trend seen since mid-September. If the pair drops below the support at 0.5750, we might see increased selling pressure, potentially pushing it down to around 0.5710. The Federal Reserve’s actions can significantly impact the US Dollar, with interest rate changes playing a crucial role in controlling inflation and employment. The Federal Reserve meets eight times a year to set its monetary policy. When the Fed uses Quantitative Easing, it increases credit flow during tough times, often weakening the Dollar. In contrast, Quantitative Tightening usually strengthens it. Currently, the New Zealand Dollar is retreating from its recent high near 0.5800 against the US Dollar as the market adopts a cautious stance before the Federal Reserve meeting. For derivative traders, this creates a crucial moment where the pair’s future movement hinges heavily on the Fed’s announcement.

Market Anticipation

Market expectations lean towards a more dovish Fed, supported by new data revealing a slowing US economy. The latest Consumer Price Index (CPI) inflation figures for September 2025 were 2.8%. Meanwhile, the recent non-farm payrolls report showed a modest addition of 95,000 jobs, pushing unemployment to 4.2%. These indicators suggest that the Fed might signal an end to its tightening cycle or even suggest possible rate cuts. For traders, the key level to monitor is the resistance at 0.5805. If the Fed’s message is dovish and the NZD/USD breaks through this level, it could be a signal to consider call options or long futures positions, aiming for the next resistance at 0.5850. This would indicate a potential shift away from the bearish trend since mid-September. On the other hand, if the Fed takes a surprisingly hawkish stance, or if the 0.5800 resistance holds firm, we could see a decline. A break below 0.5750 would signal bearish conditions, leading traders to consider put options or short positions, with a potential target near 0.5710, which served as support earlier in October 2025. We should remember the lessons from the aggressive rate hikes of 2022 and 2023, where a hawkish Fed consistently strengthened the US Dollar. Although the economic landscape has changed by late 2025, the Dollar remains very sensitive to Fed policy. Any unexpected shift from dovish expectations could trigger sharp market movements. Global risk sentiment is also fragile, adding to the challenges for the Kiwi Dollar. Recent data revealed that China’s manufacturing PMI for October 2025 fell to 49.8, indicating a slight contraction, which may weigh on risk-sensitive currencies like the NZD. This backdrop makes the rally towards 0.5800 look vulnerable without strong support from the Fed. Create your live VT Markets account and start trading now.

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