Insights 
VT 
The New Zealand Dollar (NZD) is projected to possibly decline and test the 0.5720 level, according to UOB Group’s FX analysts. Currently under mild downward pressure, the NZD might edge lower in the longer term, with a potential target of 0.5700.
In a short-term view, previous anticipation of a sideways trading phase between 0.5750 and 0.5790 was contradicted by a rise to 0.5788 followed by a drop to 0.5727. Despite increased downward momentum, further declines beyond 0.5720 appear unlikely based on current momentum. Resistance levels are identified at 0.5760 and 0.5775.
Medium Term Forecasts
In the medium term, forecasts from 29 October suggested a potential rise above 0.5800, though maintaining that level was uncertain. After the NZD reached 0.5801 and then retreated, updated expectations saw NZD trading between 0.5730 and 0.5805. The slight increase in downward momentum points to a possible test of 0.5700, with another support at 0.5720. A break above 0.5790 could reduce current downward pressure.
We are now seeing mild downward pressure build on the NZD/USD after its failure to hold above 0.5800 earlier this week. A test of the 0.5720 support level seems likely in the coming days. For traders, this suggests a bearish bias is warranted, with a potential further slide toward the 0.5700 mark over the next few weeks.
This perspective is reinforced by New Zealand’s latest Q3 CPI data, which came in at 1.8%, missing the 2.1% forecast and dampening expectations for any near-term rate hikes from the Reserve Bank of New Zealand. The market is now pricing in a more dovish RBNZ stance through early 2026. This fundamentally supports a weaker Kiwi dollar.
US Dollar Policy Divergence
On the other side of the pair, the US dollar remains firm, supported by last month’s strong non-farm payrolls report which showed a gain of 250,000 jobs. This data keeps the Federal Reserve on a hawkish path, creating a clear policy divergence against the RBNZ. This divergence is a key driver for potential NZD/USD weakness.
Given the increased downward momentum, purchasing put options with a strike price around 0.5700 could be a viable strategy to position for a break lower. Alternatively, for those expecting a more gradual decline, selling call options with a strike above the 0.5790 resistance level could collect premium. This level is key, as a break above it would signal the current downward pressure has eased.
We’ve seen a similar pattern before, looking back at the price action in the second quarter of 2024. The pair then also failed to sustain a break above a key resistance level, which was followed by a multi-week drift lower. This historical precedent suggests that the recent failure at 0.5801 could be a significant bearish signal for the medium term.
