New Zealand Dollar rises ahead of US Midterm elections as pressure mounts on US Dollar

• NZD/USD climbs towards 0.5627 against the US Dollar as attention turns to the US midterm elections.
• Expectations remain for the RBNZ to continue tightening monetary policy.
• New Zealand’s Q3 labour market figures are also on investors’ radar.

A 0.22% rise against the US Dollar (USD) takes the New Zealand Dollar (NZD) to around 0.5627 on Tuesday. The currency is also markedly stronger against its other peers, with the exception of the Canadian Dollar (CAD).

Support for the Kiwi around 0.5600 has held since last week’s monetary policy announcement from the Reserve Bank of New Zealand (RBNZ), which unexpectedly kept interest rates on hold.

NZD downside appears contained as Commerzbank views RBNZ decision as a pause

Rather than signalling a softer policy stance, the Reserve Bank of New Zealand’s latest decision represents “more of a pause than a dovish pivot.” That is the assessment of Commerzbank strategists, who still see policy leaning towards additional tightening. They “continue to expect two further hikes, in December and 1Q27, which should limit further NZD downside.”

Next on investors’ agenda are New Zealand’s (NZ) Q3 employment figures, due for release on Wednesday.

Forecasts put the Labour Cost Index at 0.5%, down from 0.7% in the second quarter of this year. Meanwhile, the Unemployment Rate is expected to decline from 5.6% to 5.5%.

For the US Dollar, the United States (US) midterm elections are the focus as investors prepare for the vote. At the time of writing, the US Dollar Index (DXY) provides a measure of the Greenback’s value against six major currencies.

Democrats tipped to gain in US midterms as markets assess sweep prospects

With “the US midterm elections will be held on Tuesday,” Brown Brothers Harriman strategists point to “Democrats widely expected to win the House of Representatives.” As for the other chamber, they say “Senate control is much closer, but the tide favors the Democratic party,” noting that “Democrats need a net gain of four seats to secure a majority in the Senate” — an objective they consider “within reach as Republicans are defending six of the seven toss-up seats.”

According to BBH, betting markets “favor a Democratic sweep,” with Polymarket and Kalshi “putting the odds around 70%.” The strategists argue that this “points to a relatively muted initial market reaction if Democrats win both chambers,” while “a Republican Senate hold would be the bigger surprise and could spark more market volatility.”

NZD/USD Technical Analysis Shows a Bearish Near-Term Bias

At 0.5619 on the daily chart, NZD/USD remains below its 20-period Exponential Moving Average (EMA) of 0.5651, leaving the near-term outlook bearish. Failure to recover this short-term EMA indicates that rallies are still being constrained. Although the Relative Strength Index (RSI), at around 40, signals some improvement in momentum, it remains subdued, suggesting consolidation rather than a full reversal.

To relieve the prevailing downward pressure, the pair would need a sustained break above immediate resistance at the 20-period EMA of 0.5651. The supplied dataset offers no nearby technical support levels, so traders may turn to earlier swing lows on the broader chart to identify potential demand zones. For now, trading below the EMA leaves the directional bias to the downside.

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