The Reserve Bank of New Zealand (RBNZ) decided last week to cut interest rates by 50 basis points, contrary to expectations of a 25-basis point cut. This brought the official cash rate down to 2.50%.
The NZD/USD pair fell today, reaching 0.5695 — its lowest level since April 10, 2025. This marks a drop of nearly 5% from the recent high of 0.6008 recorded on September 17, 2025. Despite the decline, the pair remains up approximately 2% year-to-date.
Recent New Zealand Economic Data Signals Weakness
Latest New Zealand economic indicators show signs of weakness:
- The Business PMI remains in terms of contraction territory at 49.9 points.
- Business Confidence Index fell to 49.6 points, down slightly from 49.7 in the previous reading.
- The Commodity Price Index showed a monthly decline of 1.1%, compared to the previous figure of 0.7%.
Stronger U.S. Dollar Adds Pressure on NZD
One key factor contributing to the downward pressure on NZD/USD is the broad strength of the U.S. dollar against most major currencies. This comes despite the ongoing U.S. government shutdown and uncertainty in the American economic outlook due to the lack of published data — particularly labor market and inflation figures.
In addition, markets are now pricing in two more rate cuts by the Federal Reserve this year: one 25 basis point cut in October and another in December.
Technical Analysis
- Support Levels: After breaking the pivot point at 0.5732, the pair may target the following support levels: 0.5701, 0.5685, and 0.5654.
- Resistance Levels: If the pair moves back above the pivot point, it could face resistance at 0.5748, 0.5779, and 0.5795.
Technical Indicators
- The Relative Strength Index (RSI) currently stands at around 30, indicating negative momentum.
- The +DMI (Positive Directional Movement Index) reads 12, while the –DMI stands at 24, highlighting a clear bearish dominance.
- A bearish crossover between the MACD line and the signal line further supports the continuation of the negative trend in NZD/USD.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
