NZD/USD Price Forecast: Is Further Downside Likely Below 0.5560?

• NZD/USD slips towards 0.5620, pressured by the US Dollar’s partial recovery from early losses.
• With US midterm elections approaching, investors prepare for volatility.
• For this year’s third quarter, New Zealand’s Unemployment Rate is expected to decline to 5.5%.

Selling pressure weighs on the New Zealand Dollar (NZD) against the US Dollar (USD), leaving NZD/USD near 0.5620 in Monday’s European session. A partial reversal of the US Dollar’s early losses is dragging the Kiwi pair lower. The Greenback, however, remains under pressure ahead of Tuesday’s United States (US) midterm elections.

Despite rebounding from an intraday trough of 101.43, the US Dollar Index (DXY) remains 0.3% lower near 101.70 at the time of writing. The index tracks the Greenback against six major currencies.

Could a Democrat sweep in US midterms weigh on the Dollar outlook?

For FX markets this week, ING’s Chris Turner identifies the US midterm elections as the principal event risk. Betting markets, he notes, now assign the Democrats a “70-72% chance of taking both the House and the Senate.” In his view, “one could make the case that the Dollar should come lower on such an outcome,” since a Democrat clean sweep would likely “lead to gridlock on the debt ceiling, a prolonged government shutdown next year and could encourage President Trump to pursue an even more activist foreign policy agenda.” Turner therefore suggests that investors will assess these political risks alongside factors that continue to support the Dollar and DXY around 102.00: robust US growth, inflation above target and continued Fed tightening.

Due at 15:00 GMT later in the day, October’s US ISM Manufacturing PMI figures will be in focus for investors.

Meanwhile, Wednesday’s Q3 labour market release is awaited in New Zealand (NZ). Expectations are for the Unemployment Rate to ease from the previous 5.6% to 5.5%.

NZD/USD Technical Analysis: Can the Pair Shake Off Its Bearish Bias?

Trading at 0.5623 on the daily chart, NZD/USD retains a bearish short-term bias below its 20-day Exponential Moving Average (EMA) of 0.5655. The brief mid-October rebound failed to hold, and the pair has since continued to edge lower. Its inability to move above the short-term EMA points to sustained selling pressure.

At around 41, the 14-day Relative Strength Index (RSI) sits below the neutral 50 mark. This indicates weak upward momentum, rather than outright oversold conditions.

For the bearish tone to ease and a more substantial corrective rebound to become possible, a daily close above the immediate resistance at the 20-day EMA near 0.5655 would be required. On the downside, the low of 14 October at 0.5564 provides critical support. A break beneath it could set off another leg lower.

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