The NZD/USD pair increased by 0.35% to near 0.5675 during the European trading session on Friday. This rise occurred as the US Dollar faced pressure amidst anticipation for key US economic data, which has been delayed due to a government shutdown. The US Dollar Index (DXY) was near its two-week low, trading at approximately 99.00.
A table displays the percentage change of the US Dollar against major currencies, showing the US Dollar was weakest against the New Zealand Dollar. Traders have adjusted their expectations for the Federal Reserve meeting in December, focusing on reducing inflation. Despite the NZD trading higher, its upswing might be limited due to expected interest rate cuts by the Reserve Bank of New Zealand amid low job demand.
Nzd In A Falling Channel
NZD/USD has been in a Falling Channel for two months, with a bearish trend overall. The 20-day EMA near 0.5700 acts as a resistance, and the RSI is near 40.00. If the RSI drops below 40.00, a bearish movement could follow. If the pair breaks below 0.5635, it may drop to 0.5600 or the April low of 0.5485. Alternatively, breaking the 0.5731 level could see a rise to 0.5800 or the October 7 high of 0.5853.
The New Zealand dollar has shown a brief burst of strength against the US dollar, climbing towards 0.5675. We see this as a temporary move driven by short-term US dollar weakness rather than a fundamental shift in the trend. In the coming weeks, this rally should be viewed as an opportunity to position for a decline in the pair.
The core reason for our bearish outlook is the diverging paths of the two central banks. The Reserve Bank of New Zealand is widely expected to cut interest rates before the end of this year, which typically weakens a currency. In contrast, Federal Reserve officials continue to signal they will keep rates steady to combat inflation, which supports the US dollar.
Technical Analysis Of Nzdusd
Recent data reinforces this view. New Zealand’s economy has shown signs of slowing, with the latest quarterly GDP figures from Q3 2025 indicating a contraction of 0.2%. At the same time, recent US inflation data for October 2025 showed core inflation remains sticky at 3.5%, well above the Fed’s 2% target, giving them little reason to consider cuts.
Technically, the NZD/USD pair remains in a clear downward channel that has been in place for the last two months. The price is approaching a key resistance level at the 20-day moving average near 0.5700. This level has consistently capped rallies, suggesting that selling pressure will likely re-emerge around this point.
For derivative traders, this setup suggests buying put options on the NZD/USD could be a prudent strategy. This allows us to profit from a potential fall while limiting our risk to the premium paid for the option. We are targeting a move back towards the 0.5600 level, and a break below that could open the door to the 0.5485 lows we saw back in April 2025.
