NZD/USD fell nearly 0.8% after two days of gains and traded near 0.5710 during European hours on Thursday. The pair remains within a descending channel on the daily chart.
Price is below the nine-day Exponential Moving Average (EMA), with the nine-day EMA near 0.5764. The 50-day EMA is at 0.5857 and has slipped.
Momentum Signals Remain Bearish
The 14-day Relative Strength Index (RSI) is 35 and remains below the midline. This points to weak momentum.
The pair is testing support at 0.5699, a four-month low set on March 31. Further support sits near the channel base around 0.5640.
If price falls below the channel, the next area is near 0.5580, an 11-month low last seen in November 2025. This would extend the current decline.
Resistance is at the channel top around 0.5820, with the 50-day EMA at 0.5857. A break above this area could shift price towards 0.5996, the monthly high from March 2.
Strategy Considerations For A Potential Breakdown
We see the NZD/USD pair is holding losses around the 0.5710 level, confirming the persistent weakness within its descending channel. This price action is testing the significant support at the four-month low of 0.5699. Given the Relative Strength Index is at a low 35, the downward momentum appears strong.
This technical weakness is reinforced by fundamental pressures, as New Zealand’s trade balance figures released yesterday showed a wider-than-expected deficit due to falling dairy prices. This contrasts sharply with the US, where March non-farm payrolls came in surprisingly strong at 285,000, fueling expectations that the Federal Reserve will hold rates higher for longer. This policy divergence is putting significant weight on the pair.
For the coming weeks, we believe traders should consider buying put options to position for a potential break below the 0.5699 support. Establishing positions with strike prices near 0.5650 would align with a move toward the channel’s lower boundary. Implied volatility on NZD/USD options has ticked up to 12.5%, the highest since January, suggesting the market is pricing in larger price swings which can make options attractive.
On the other hand, we must watch the 0.5764 level, which represents the nine-day moving average and immediate resistance. A decisive daily close above this point could signal that the bearish momentum is fading, potentially warranting hedges or a reassessment of short positions. We saw a similar setup of prolonged weakness in the third quarter of 2025 before the pair eventually dropped to its November lows near 0.5580.
