NZD/USD Forecast • News & Analysis

The NZD/USD currency pair has been consolidating in recent weeks as the market experiences a tug-of-war between notable technical and fundamental factors. Recent exchange rate movements suggest this consolidation pattern will break soon, so the pair should be watched closely for a trading opportunity. Kiwi traders also eagerly watch the Fed and RBNZ for anticipated central bank rate decisions.

In this article, Benzinga provides an in-depth analysis of the current market conditions for NZD/USD, explores technical and fundamental perspectives for the currency pair, and presents a detailed NZD/USD forecast for the pair’s future direction, so keep reading!

Current Market Analysis

The NZD/USD pair has shown some volatility recently. As of Feb. 11, 2025, the pair traded around 0.5650, slightly increasing from previous levels. The pair broke above its 20-day Simple Moving Average (SMA), indicating renewed bullish momentum. However, the outlook remains mixed, with potential resistance at 0.5700 and support seen around 0.5603 on the chart for the pair.

The following factors have been influencing the market for NZD/USD: 

Economic Data

• U.S. Economic Data: Weaker-than-expected U.S. economic data, such as the ISM Services PMI, has weighed on the U.S. Dollar, boosting the NZD/USD pair.
• New Zealand Economic Data: New Zealand's unemployment rate rose to 5.1% in Q4 2024, leading to expectations of further interest rate cuts by the Reserve Bank of New Zealand (RBNZ).

Central Bank Policies

• Federal Reserve (Fed): Investors have been closely watching Fed Chair Jerome Powell’s testimony and comments on tariffs and inflation. The Fed’s stance on monetary policy adjustments will influence the USD’s strength.
• Reserve Bank of New Zealand (RBNZ): The RBNZ has already cut interest rates by 125 basis points to 4.25%. Due to a weak labor market, it is expected to continue easing monetary policy via cuts in its Official Cash Rate at coming policy meetings. The financial markets anticipate another 50 basis point rate cut to 3.75% at the RBNZ’s Feb. 19 meeting. The policy rate is expected to fall as low as 3.00% over the coming year.

Geopolitical Events

• US-China Trade Tensions: The recent increase in tariffs on steel and aluminum imports by the Trump administration and China’s retaliatory tariffs have heightened global trade war concerns. Given New Zealand’s key trading relationship with China, this uncertainty can adversely impact the NZD/USD pair.

Technical Analysis

This section contains a detailed technical analysis rundown for the NZD/USD currency pair. It includes technical indicators such as key support and resistance levels, moving averages and trend lines that can help you identify potential future exchange rate moves. A daily chart for the pair’s exchange rate appears below.

Daily exchange rate candlestick chart of the NZD/USD currency pair showing the 50- and 100-period moving averages in blue and orange, respectively, key converging trendlines in red and the 14-period RSI in the indicator box below the chart. Source: Metatrader 5.

Support and Resistance Levels

The NZD/USD pair is currently nearing resistance at 0.5694, with additional resistance seen above at 0.5702 and 0.5722. On the downside, the key support levels are at 0.5625 and 0.5610/19, with a further support area between 0.5541 and 0.5563. A break below this region could lead the pair toward testing the key 0.5516 level, its lowest point since October 2022.

Trendlines

On the 4-hour timeframe, NZD/USD is in an uptrend, creating new highs and lows within two converging trendlines. The exchange rate recently broke through the previous minor key resistance at 0.5675 and broke above a trendline that can be considered another minor support level. The overall pattern indicates that the pair is in a consolidation phase within a triangular pattern.

Relative Strength Index (RSI)

The 14-day RSI is positioned slightly below the 50 level at 49.24, suggesting a neutral to mildly bearish market bias. 

Moving Averages

The NZD/USD pair remains below its 50- and 100-day Simple Moving Averages (SMAs), which lie around 0.5673 and 0.5850, respectively. These SMAs act as pivotal levels for the pair's medium-term market direction, and a decisive break above them could accelerate the upside substantially. 

Elliott Wave Analysis

The Elliott Wave analysis suggests that the NZD/USD pair is in the third wave of a five-wave uptrend. The recent breakout above 0.56750 confirms the continuation of this trend, with potential targets around 0.5794 and 0.5800.

Chart Patterns

The NZD/USD pair seems to be consolidating within a triangular pattern bounded by two converging trendlines. Since the pattern looks to be nearing its completion point, traders should watch closely for a break of either trendline, which would be expected to result in a sharp move of around 200 pips projected from the trendline breakout point in the direction of the breakout. 

Fundamental Analysis

This section examines the impact of fundamental factors such as economic indicators, central bank policies, geopolitical events and other global factors on the NZD/USD currency pair.

U.S. Fundamental Overview

U.S. Economy

The U.S. economy is experiencing moderate growth, with real GDP increasing at an annual rate of 2.3% in Q4 2024. Increases in consumer and government spending primarily drove this growth, although a decrease in investment partly offset it. The unemployment rate has remained relatively stable at 4.0% as of January 2025.

Economic Indicators

• GDP Growth: The U.S. economy grew by 2.3% in Q4 2024, following a 3.1% growth in Q3 2024.
• Personal Income and Outlays: Personal income increased by 0.4% in December 2024, while personal consumption expenditures (PCE) increased by 0.7%.
• Trade Deficit: The U.S. current account deficit widened to $310.9 billion in Q3 2024, up from $275.0 billion in Q2 2024.

Central Bank Monetary Policy

The Federal Reserve has maintained a cautious stance on monetary policy, with the Federal Funds Rate currently at 4.75%. Fed Chair Jerome Powell has indicated that the central bank is closely monitoring inflation and trade policies to determine future rate adjustments.

Geopolitical Events

Trade tensions between the U.S. and China continue to impact market sentiment. The US's recent increase in tariffs on steel and aluminum imports, along with China's retaliatory tariffs, has heightened concerns about a potential escalation in the trade war.

New Zealand Fundamental Overview

New Zealand Economy

The New Zealand economy has recently shown sluggish growth, with the GDP growth rate slowing to 2.3% in Q4 2024. The unemployment rate has risen to 5.1% in the December 2024 quarter, reflecting ongoing challenges in the labor market. Inflation has been relatively contained, with the Consumer Price Index (CPI) increasing by 2.2% annually in Q4 2024, remaining within the Reserve Bank of New Zealand's target range. 

Central Bank Monetary Policy

The Reserve Bank of New Zealand (RBNZ) is widely expected to cut interest rates by 50 basis points to 3.75% at its policy meeting on February 19. RBNZ Chief Economist Paul Conway highlighted the need to cautiously adjust monetary policy, noting that the current 4.25% official cash rate (OCR) remains restrictive compared to the estimated neutral range of 2.5% to 3.5%. Conway indicated further cuts are likely, with the central bank signaling a potential 50 basis-point reduction in its next meeting. Inflation in the fourth quarter dropped to an annual rate of 2.2%, comfortably within the central bank’s 1%-3% target range for the second consecutive quarter.

Global Trade

Trade negotiations between the U.S. and China could impact the NZD/USD pair. The NZD/USD pair has been vulnerable amid US-China trade tensions, with the additional U.S. levy on China and China's retaliatory tariffs on some U.S. exports raising the risk of a further escalation of the trade war between the world's two largest economies. This has weighed on investor sentiment, underpinning the safe-haven U.S. Dollar (USD) and denting demand for the perceived riskier Kiwi.

Dairy Prices

High dairy prices can boost New Zealand's export income, positively impacting the NZD relative to the USD. According to the latest data, dairy prices have remained strong, contributing to New Zealand's export income and supporting the NZD. The RBNZ expects economic growth to recover during 2025 as lower interest rates encourage investment and other spending.

Forecast for the NZD/USD Pair

This section contains potential scenarios for exchange rate movements in the short, medium and long terms for the NZD/USD currency pair. 

Short-Term Forecast (Next 1-3 Months)

Short-term trading in the NZD/USD pair is expected to remain cautious ahead of key economic data releases such as the U.S. Nonfarm Payrolls (NFP) report and the upcoming RBNZ policy meeting. From a technical perspective, the pair is currently testing resistance around 0.5650. If it breaks above this level, it could reach 0.5794, but if it remains below that level, it might pull back to 0.5550. The short-term outlook is somewhat bearish due to the 14-day RSI being below the central 50 level.

Medium-Term Forecast (Next 3-6 Months)

In the medium term, the NZD/USD pair is expected to rise to around 0.5929 by the end of 2025’s first quarter. This would represent a 5.09% increase from the current exchange rate. The medium-term forecast for the pair also remains bullish after that, with potential further gains to 0.6028 expected by the third quarter of 2025.

Long-Term Forecast (Next 6-12 Months)

The NZD/USD pair is projected to continue its upward trend, potentially reaching the 0.6200 level by the first quarter of 2026. This would significantly increase the exchange rate by approximately 9.89% from the current rate.

Conclusion

Overall, the NZD/USD pair remains in a critical phase, with technical indicators, including trendline and wave analysis, and fundamental data aligning to suggest a near-term breakout of a triangular consolidation pattern. Kiwi traders should also pay close attention to any economic data releases that could impact central bank monetary policy decisions.

For those looking to profit from trading the Kiwi, top online forex trading platforms like FOREX.com will give you the tools, competitive dealing spreads and insights you need to operate effectively in the forex market and capitalize on future NZD/USD market moves.