NZD/USD Extends Three-Day Decline as Hawkish Fed Bets Lift Dollar

Traders' Opinions

Summary:

NZD/USD falls for a third consecutive session towards 0.5550 as stronger US inflation and rising December rate hike expectations support the US Dollar, offsetting some positive sentiment surrounding New Zealand's election results.

SELL NZDUSD

EXP

TRADING

0.55650

Entry Price

0.53900

0.56600

0.55443 -0.00152 -0.27%

0.0

Pips

Flat

0.53900

Exit Price

0.55650

Entry Price

0.56600

NZD/USD remains under pressure, trading around 0.5550 during Thursday's European session and extending its decline for a third consecutive day. The pair is struggling as the US Dollar benefits from stronger expectations of further Federal Reserve tightening following hotter-than-expected US inflation data.

Markets have significantly increased their expectations of a December rate hike after Fed Governor Christopher Waller indicated support for another 25-basis-point increase, while leaving the possibility of a larger 50-basis-point move open if inflation continues to accelerate. According to the CME FedWatch Tool, traders are pricing an 87% probability of a December hike, alongside nearly 13% odds of a larger increase. This hawkish repricing is providing considerable support for the Greenback and weighing on risk-sensitive currencies such as the New Zealand Dollar.

Meanwhile, developments in New Zealand are offering some support to the Kiwi. Preliminary election results suggest that the incumbent National-led coalition could retain power, potentially preserving the Reserve Bank of New Zealand's (RBNZ) sole focus on price stability. This contrasts with the Labour Party's proposal to restore a dual inflation-employment mandate, creating an important distinction between the parties' monetary policy preferences.

Analysts at Brown Brothers Harriman highlight that the ruling coalition currently holds a one-seat majority, with official election results expected on November 27. Until then, political uncertainty could continue influencing investor sentiment towards the New Zealand Dollar.

New Zealand's 10-year government bond yield has also declined by three basis points to 4.76%, supported by strong auction demand and reduced concerns surrounding the country's fiscal outlook.

Technical Analysis

NZD/USD remains under selling pressure, with price trading around 0.5562 after failing to sustain several recovery attempts. The broader H4 structure continues to favour sellers, with the pair establishing a sequence of lower highs and lower lows following its rejection from the 0.5700 region.

The 0.5575–0.5585 area represents an important resistance zone. This region previously acted as support but has now been breached, increasing the likelihood of sellers defending it during any corrective rebound. A recovery towards this area could provide an opportunity for bearish continuation, particularly if buyers struggle to regain momentum.

The recent price action also shows repeated rejection around 0.5630–0.5650, reinforcing the prevailing bearish structure. Meanwhile, the pair has slipped below the immediate support region, suggesting that downside momentum remains intact.

My preferred scenario is a modest recovery towards 0.5575–0.5585 before sellers attempt another move lower. The next downside target sits around 0.5520, while a sustained break below this level could expose the 0.5380 region.

A decisive recovery above 0.5650 would weaken the immediate bearish outlook and suggest that buyers are regaining control.

TRADE RECOMMENDATION

SELL NZD/USD

ENTRY PRICE: 0.5565

STOP LOSS: 0.5660

TAKE PROFIT: 0.5390

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