NZD/USD Price Forecast: Further recovery towards 20-day EMA looks likely

• NZD/USD extends rebound towards 0.5640 as RBNZ outlook remains hawkish.
• A December interest rate rise by the RBNZ is expected by Commerzback.
• Uncertainty before US mid-term elections prompts a US Dollar recovery.

The Reserve Bank of New Zealand’s (RBNZ) surprise decision to keep the Official Cash Rate (OCR) at 2.75% triggered market turmoil on Wednesday, after which the Kiwi pair began to recover. During Friday’s European session, the New Zealand Dollar (NZD) extends that rebound against the US Dollar (USD), approaching 0.5640.

Against expectations of an increase to 3%, the RBNZ kept its OCR unchanged at 2.75%. Nevertheless, citing upside risks to inflation, the central bank signalled that the pause was temporary and that monetary tightening would continue.

NZ outlook stabilises as Commerzbank views RBNZ decision as a pause rather than a pivot

Rather than marking the beginning of an easing cycle, the RBNZ’s latest decision represents “more of a pause than a dovish pivot,” according to analysts at Commerzbank. Despite the currency’s recent weakness, they suggest that the anticipated policy trajectory “should limit further NZD downside” and “continue to expect two further hikes, in December and 1Q27,”.

Caution before next week’s United States (US) mid-term elections is meanwhile drawing buyers to the US Dollar. Having recovered all its earlier losses, the US Dollar Index (DXY) stands almost unchanged at around 101.84 at the time of writing. The index measures the Greenback against six major currencies.

US midterms raise prospects of divided government and policy deadlock

A likely split between the White House and Congress leaves the US “heading towards what is known as a ‘divided government’,” according to analysts at Commerzbank. Even if legislative progress loses momentum, much of President Trump’s agenda can still proceed, they suggest, noting that in areas important to him, “such as foreign and trade policy, he has in any case relied primarily on executive orders recently,”.

NZD/USD Remains Bearish in the Near Term: Technical Analysis

Below the 20-period Exponential Moving Average (EMA) at 0.5658, NZD/USD is trading at 0.5637 on the daily chart, leaving the near-term outlook bearish. Its failure to regain this short-term trend gauge indicates that recent recoveries remain constrained within a wider decline. Meanwhile, the Relative Strength Index (RSI) reading of 43.4 remains below neutral, pointing to only limited recovery momentum.

The 28 October low of 0.5584 provides the main support on the downside. Above the market, the first resistance lies at the 20-day EMA near 0.5658, where sellers are likely to seek to preserve the prevailing downtrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)