Insights 
VT 
The New Zealand Dollar (NZD) is expected to decline, but it is unlikely to hit the major support level at 0.5690 today. There is another support at 0.5720. In the long term, the outlook for NZD has turned negative, with the key level to monitor remaining at 0.5690.
In the short-term view, NZD was initially expected to range between 0.5760 and 0.5805. However, after reaching 0.5806, it fell to 0.5735. The rapid increase in downward momentum may lead to more declines, but reaching the 0.5690 support today is not anticipated. Current resistance levels are at 0.5765 and 0.5780.
Negative Outlook Over Weeks
Over the one to three weeks period, the outlook for NZD has remained negative since 08 October when the spot was at 0.5750, with the level of interest at 0.5690. This perspective persists as long as the strong resistance at 0.5810 remains intact. The analysis is based on information collated by FXStreet Insights Team, including contributions from internal and external analysts.
The rapid increase in downward momentum for NZD/USD suggests further declines are likely in the coming weeks. Our view has shifted to negative, and we see the currency pair testing the major support level at 0.5690. This bearish outlook holds as long as the price remains below the strong resistance at 0.5810.
This weakness is reinforced by New Zealand’s domestic picture, as the latest inflation data for the third quarter, released just this week, came in at an annualized 2.8%, well below the RBNZ’s target band and surprising markets. This data cools any expectation of further rate hikes from the Reserve Bank of New Zealand. The decline in global dairy prices, with a 4% drop in the most recent Global Dairy Trade auction, further pressures the kiwi dollar.
On the other side of the pair, the US dollar continues to find support from a relatively hawkish Federal Reserve. Last week’s US employment report showed the economy added 210,000 jobs in September, beating forecasts and suggesting the Fed has little reason to consider rate cuts soon. This growing policy divergence between the Fed and the RBNZ is a primary driver for our negative NZD/USD outlook.
Options for Derivative Traders
For derivative traders, this environment supports buying NZD/USD put options. A strike price near 0.5700 with an expiration in mid-November would capture the potential move down to our key support level. This strategy offers a defined risk while capitalizing on the expected increase in downward momentum.
We must use the 0.5810 level as a critical line for risk management. A decisive break above this price would invalidate our bearish view and suggest the recent plunge was a temporary correction. In that scenario, any bearish positions should be reconsidered or closed.
Looking back, we saw a similar setup in early 2024 when weak commodity prices and a strong US dollar pushed the pair down through several support levels. That move was sustained for nearly two months before a significant bottom was found. The current macroeconomic backdrop feels reminiscent of that period, suggesting this downward trend has more room to run.
