RBNZ’s surprise decision to hold rates sends New Zealand Dollar below 0.5600 against USD

• The RBNZ’s surprise decision to keep interest rates on hold sends NZD/USD sharply lower.
• Geopolitical uncertainty and expectations of a hawkish Fed support the USD, adding to pressure on the pair.
• Attention turns to the RBNZ’s post-meeting press conference before the crucial FOMC interest rate announcement.

Following the Reserve Bank of New Zealand (RBNZ) interest rate decision, NZD/USD falls below 0.5600 in Wednesday’s Asian session amid heavy selling. Bears are now targeting the monthly low.

At the end of its October policy meeting, the central bank kept the Official Cash Rate (OCR) unchanged, contrary to widespread expectations of a 25 basis points (bps) increase. The surprise decision puts considerable pressure on the New Zealand Dollar (NZD). Continued demand for the US Dollar (USD) adds to the pair’s losses, with lingering geopolitical uncertainty and expectations of a hawkish Federal Reserve (Fed) supporting the US currency.

For their next catalyst, traders await comments from the RBNZ’s Anna Breman at the post-meeting press conference. Focus will subsequently turn to the conclusion of the two-day FOMC meeting, with the decision due later in the US session. Market participants will scrutinise the outcome for further indications of the Fed’s policy direction. Developments in the Middle East crisis will also be important in shaping USD demand and movements in NZD/USD.

NZD/USD price action on the daily chart

Technical Outlook Remains Bearish

Trading below the falling 100-day Simple Moving Average (SMA) near 0.5767, NZD/USD retains a bearish short-term outlook. The pair also remains beneath every visible Fibonacci retracement level of the latest decline. Failure to recover the 23.6% retracement at 0.5663 keeps prices near the bottom of their recent range, indicating that sellers remain in control. Any rebound is likely to encounter selling around the cluster of resistance levels above.

An initial recovery would face resistance at the 23.6% Fibonacci retracement of 0.5663, ahead of the 38.2% level at 0.5725. Beyond these, the 100-day SMA at 0.5767 and the 50.0% retracement just above it at 0.5775 reinforce the broader resistance zone. Stronger recovery attempts are expected to be capped by the 61.8% retracement at 0.5825, followed by the higher Fibonacci barriers at 0.5895 and 0.5986. On a renewed decline, the recent cycle low around 0.5564 is the next important support area to monitor.

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