Technical Analysis: NZD/USD falls sharply after central bank decision
2025-10-08 19:22:00
The Reserve Bank of New Zealand (RBNZ) cut its key interest rate this morning, Wednesday (October 8). The official cash rate was lowered by 50 basis points, from 3.0% to 2.5%. Most analysts had expected a smaller cut, to 2.75%.
Furthermore, the Reserve Bank of New Zealand indicated that further policy easing was possible given recent deteriorating economic data. This decisive move caught traders off guard and led to increased market volatility. The NZD/USD exchange rate chart shows that the New Zealand dollar has fallen to its lowest level against the US dollar since mid-April.
The New Zealand dollar's downward momentum was further exacerbated by a stronger US dollar, likely driven by investors' growing concerns about a potential US government shutdown, which in turn prompted a shift to cash assets.
Technical Analysis
In the second half of 2025, the fluctuation of the New Zealand dollar exchange rate formed a descending channel on the trend chart. It is worth noting that the peak at point F showed the following characteristics:
(Source of NZD/USD daily chart: Yihuitong)
It is only slightly higher than the previous high point D;
It is above the psychological level of 0.6000;
A long upper shadow formed, consistent with the "failure to advance upward" (UTAD) pattern described in the Wyckoff trading method.
This appears to be a strategic false breakout above the “lower highs” structure, paving the way for a move back towards the autumn lows and a break below the corrective pattern shown in blue.
From a bearish perspective:
The median line of the descending channel forms a resistance level (indicated by the arrow);
Today's fall in the exchange rate signals an imbalance in the market with sellers taking advantage, setting the stage for the formation of the "fair value gap" resistance area.
Meanwhile, bullish investors may hope that the exchange rate will find support at the lower boundary of the descending channel again in 2025, providing momentum for a rebound within the channel. However, for this scenario to materialize, the market news backdrop would need to shift. Currently, the NZD/USD chart suggests bearish sentiment is dominant, with the exchange rate potentially vulnerable to further declines towards the 0.5700 level.
At 19:19 Beijing time, NZD/USD was at 0.5773/74, down 0.41%.
Furthermore, the Reserve Bank of New Zealand indicated that further policy easing was possible given recent deteriorating economic data. This decisive move caught traders off guard and led to increased market volatility. The NZD/USD exchange rate chart shows that the New Zealand dollar has fallen to its lowest level against the US dollar since mid-April.
The New Zealand dollar's downward momentum was further exacerbated by a stronger US dollar, likely driven by investors' growing concerns about a potential US government shutdown, which in turn prompted a shift to cash assets.
Technical Analysis
In the second half of 2025, the fluctuation of the New Zealand dollar exchange rate formed a descending channel on the trend chart. It is worth noting that the peak at point F showed the following characteristics:
(Source of NZD/USD daily chart: Yihuitong)
It is only slightly higher than the previous high point D;
It is above the psychological level of 0.6000;
A long upper shadow formed, consistent with the "failure to advance upward" (UTAD) pattern described in the Wyckoff trading method.
This appears to be a strategic false breakout above the “lower highs” structure, paving the way for a move back towards the autumn lows and a break below the corrective pattern shown in blue.
From a bearish perspective:
The median line of the descending channel forms a resistance level (indicated by the arrow);
Today's fall in the exchange rate signals an imbalance in the market with sellers taking advantage, setting the stage for the formation of the "fair value gap" resistance area.
Meanwhile, bullish investors may hope that the exchange rate will find support at the lower boundary of the descending channel again in 2025, providing momentum for a rebound within the channel. However, for this scenario to materialize, the market news backdrop would need to shift. Currently, the NZD/USD chart suggests bearish sentiment is dominant, with the exchange rate potentially vulnerable to further declines towards the 0.5700 level.
At 19:19 Beijing time, NZD/USD was at 0.5773/74, down 0.41%.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
