New Zealand Dollar slides toward one-year low as US Dollar regains strength

• NZD/USD falls 0.70% on Monday and trades near its lowest level since November 2025.
• Renewed risk aversion and geopolitical tensions revive demand for the US Dollar.
• Expectations of higher interest rates in New Zealand struggle to support the Kiwi against a stronger Greenback.

NZD/USD extends its decline on Monday and trades around 0.5582 at the time of writing, down 0.70% on the day. The pair is flirting with the November 2025 low at 0.5580 after posting six consecutive weeks of losses. NZD/USD is therefore trading close to an important area between 0.5580 and 0.5470. This region has triggered several notable rebounds since 2020, increasing the focus on the pair's behavior around current levels.

The New Zealand Dollar (NZD) remains under pressure amid renewed demand for the US Dollar (USD), as caution dominates financial markets. Turmoil in global bond markets and persistent geopolitical risks favor safe-haven assets, allowing the Greenback to regain momentum despite recently disappointing US economic data.

Geopolitical concerns remain particularly elevated. The head of Yemen's Presidential Leadership Council, Rashad al-Alimi, announced the start of military operations aimed at retaking territories still controlled by the Houthis. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said that the Strait of Hormuz would remain closed until Tehran's conditions are met. Fresh Russian strikes on Ukraine also keep uncertainty elevated and support demand for safe-haven assets.

This risk-averse environment is particularly negative for the New Zealand Dollar, which is traditionally sensitive to shifts in investor sentiment. Turmoil in global bond markets adds to the pressure, as elevated energy prices fuel concerns about persistent inflation and deteriorating public finances across several major economies.

The US Dollar rebound comes despite a less supportive US monetary policy backdrop. Recent inflation and employment data have reduced expectations of another interest rate hike as soon as October by the Federal Reserve (Fed), pushing US Treasury yields lower from their recent highs. Nevertheless, investors continue to see the possibility of another increase in borrowing costs before the end of the year, helping to limit downside pressure on the Greenback.

Investors now turn their attention to the release of the US Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) on Monday. The consensus expects the index to ease to 55 in September from 55.4 in August. The final S&P Global Services PMI will also attract attention after the preliminary estimate rose to 58.7, its highest level in more than five years.

On the New Zealand side, expectations of further monetary tightening have so far failed to halt the Kiwi's decline. Markets anticipate an increase in the Official Cash Rate (OCR) by the Reserve Bank of New Zealand (RBNZ) at its October 28 meeting. This prospect could nevertheless provide some support to the New Zealand Dollar if expectations for higher interest rates continue to strengthen.

NZD/USD technical analysis

In the daily chart, NZD/USD trades around 0.5583, extending its decline and retaining a bearish near-term bias as spot holds well below the 100-day simple moving average (SMA) at 0.5806 and the 200-day SMA at 0.5846. The pair is pressing a minor horizontal floor at 0.5580, while the Relative Strength Index (14) near 24 signals oversold conditions that could slow the downside rather than reverse the broader weakening trend for now.

On the topside, initial resistance appears at 0.5626, followed by tighter caps at 0.5649 and 0.5686, ahead of a more significant barrier at 0.5735 and the higher trend references at the 100-day SMA at 0.5806 and 200-day SMA at 0.5846. On the downside, a clean break under the immediate support at 0.5580 would expose the next bearish target at 0.5540, where buyers may try to stabilize the pair after the latest oversold slide.

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