NZD/USD Price Forecast: Further Declines Likely Below 0.5560

• NZD/USD slips towards 0.5620 as the US Dollar pares its earlier losses.
• With the US midterm elections approaching, investors prepare for volatility.
• New Zealand’s unemployment rate is expected to fall to 5.5% in this year’s third quarter.

At around 0.5620 in Monday’s European session, the New Zealand Dollar (NZD) is trading lower against the US Dollar (USD). A partial recovery in the US Dollar from its earlier losses is weighing on the Kiwi pair, although the US currency itself remains under pressure before Tuesday’s United States (US) midterm elections.

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

Dollar faces uncertainty as US midterm odds favour a Democrat sweep

Betting markets now assign the Democrats a “70-72% chance of taking both the House and the Senate.” Citing those odds, ING’s Chris Turner identifies the US midterm elections as this week’s principal event risk for FX. In his view, “one could make the case that the Dollar should come lower on such an outcome,” since a clean sweep by the Democrats would probably “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 suggests that investors will balance those political risks against factors that continue to support the Dollar and DXY around the 102.00 area: 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 the next focus for investors.

Wednesday brings New Zealand’s (NZ) Q3 labour market figures, which investors are awaiting. The unemployment rate is forecast to decline from the previous 5.6% reading to 5.5%.

NZD/USD Retains a Bearish Bias Below Its 20-Day EMA

Trading at 0.5623 on the daily chart, NZD/USD remains below its 20-day Exponential Moving Average (EMA) of 0.5655, leaving the near-term outlook bearish. Having failed to hold on to its short-lived mid-October recovery, the pair has continued to edge down. Price action beneath the short-term EMA points to sustained selling pressure.

At roughly 41, the 14-day Relative Strength Index (RSI) is still beneath the neutral 50 threshold. That reading indicates limited upward momentum rather than outright oversold conditions.

A daily close above the 20-day EMA, the immediate resistance near 0.5655, would be required to temper the prevailing bearish bias and allow a more substantial corrective rebound. On the downside, the 14 October low of 0.5564 provides crucial support. A break below that level could mark the start of another leg lower.

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