The New Zealand Dollar (NZD) may see a gradual decline, though breaking below 0.5700 seems improbable. FX analysts from UOB Group suggest that NZD remains under mild downward pressure and might test the 0.5700 level.

Over a 24-hour period, there was an expectation for NZD to decline and test the 0.5720 level. This occurred as forecasted, with a low of 0.5715 before closing at 0.5723, a drop of 0.34%. Momentum suggests further edging lower, but breaking the 0.5700 threshold remains unlikely. Resistance is identified at 0.5740 and 0.5750.

One To Three Week Outlook

In a one-to-three-week view, the outlook remains consistent since last Friday. There has been a slight increase in downward momentum, indicating NZD might edge lower towards 0.5700. If NZD breaks above the 0.5765 resistance level, it could signal a reduction in the downward pressure. Previously, the strong resistance level was set at 0.5790.

Given the mild downward pressure on the NZD/USD, we expect the pair to drift lower towards the 0.5700 support level in the coming weeks. A decisive break below this mark appears unlikely based on current momentum. This suggests that while sentiment is bearish, a significant collapse is not the base case scenario.

For traders, this outlook makes selling out-of-the-money put options with a strike price at or just below 0.5700 an interesting strategy. This approach collects premium by betting that the strong support level will hold through the option’s expiration. Should the pair remain above 0.5700, the options would expire worthless, allowing traders to keep the full premium.

Impact Of Economic Data

This view is reinforced by New Zealand’s latest economic data from October 2025, which showed quarterly inflation cooling to 2.9%, moving closer to the Reserve Bank of New Zealand’s target range. While this eases pressure for further rate hikes and weighs on the kiwi, it doesn’t signal an economic crisis that would justify a sharp currency drop. The market is now pricing in a stable policy rate from the RBNZ through the first quarter of 2026.

Adding to the gentle downward pressure, the most recent Global Dairy Trade auction in late October 2025 saw prices slip by 1.8%, continuing a trend of modest declines. As dairy is a key export for New Zealand, this softening in prices contributes to the bearish sentiment without being alarming. On the other side of the pair, upcoming US jobs data this Friday is expected to show continued labor market stability, which could keep the US dollar firm.

Historically, we have seen the 0.5700 level act as a significant psychological and technical floor for NZD/USD. For instance, looking back to the price action in the fourth quarter of 2023, this zone provided substantial support before a rebound occurred. This historical precedent gives us greater confidence that the level will be difficult to breach in the current environment.

Alternatively, a trader could implement a bear put spread by buying a put option at a strike like 0.5750 and simultaneously selling a put at 0.5700. This strategy would profit from a decline in the NZD/USD but caps the maximum profit if the price falls below 0.5700. It effectively bets on the expected downward drift while acknowledging the strength of the support level.

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