New Zealand Dollar Dips Near Yearly Low Amid Stronger USD and Geopolitical Tensions
The New Zealand Dollar (NZD) kicked off the week on a weaker footing, dropping below the 0.5600 mark against the US Dollar (USD) during Asian trading hours. This decline brought the NZD/USD pair close to its lowest level since November 2025, which was reached on Friday. The soft US Personal Consumption Expenditures (PCE) data and weak Nonfarm Payrolls (NFP) report had initially tempered expectations of a Federal Reserve (Fed) rate hike in October, pulling US bond yields away from multi-year highs. However, traders still see an 85% chance of a rate increase by year-end.
Persistent geopolitical tensions, including military operations in Yemen, Iranian threats to close the Strait of Hormuz, and Russian air strikes in Ukraine, have boosted demand for the safe-haven USD. This has pushed the NZD/USD pair closer to its highest level since April 2025, touched last week, suggesting further downward pressure on the pair. The Reserve Bank of New Zealand (RBNZ) is expected to raise its Official Cash Rate (OCR) on October 28, which could provide some support to the NZD and limit its decline.
Traders are now focusing on the FOMC meeting minutes scheduled for release on Wednesday, which could provide further direction for the NZD/USD pair. Technical analysis indicates that bears are waiting for weakness below the November 2025 swing low around 0.5580, which could open the door for further declines. On the upside, any recovery attempts are likely to face selling pressure near Friday's swing high around 0.5640-0.5645.