NZD/USD: Dovish cut - OCBC

New Zealand Dollar (NZD) fell sharply after RBNZ surprised with a 50bp cut. Pair was last at 0.5759 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Daily momentum shows signs of turning mild bearish

"In the press release, there were several highlights: Committee remains open to further reductions in the OCR as required ; Economic activity through the middle of 2025 was weak. In part, this reflects domestic constraints on the supply of goods and services in some industries, and the impact of global economic policy uncertainty."

"More timely indicators suggest that economic activity recovered modestly in the September quarter, but there remains significant spare capacity in the New Zealand economy; There are upside and downside risks to the inflation outlook in New Zealand. Cautious behaviour by households and businesses could slow the economic recovery, reducing medium-term inflation pressure."

"Alternatively, higher near-term inflation could prove to be more persistent. In our view, an explicit openness to further rate cut may further weigh on Kiwi. Daily momentum shows signs of turning mild bearish while RSI fell. Support at 0.5720 (61.8% fibo retracement of Apr low to Jull high), 0.5640 levels (76.4% fibo). Resistance at 0.58 (50% fibo), 0.5850 (200 DMA)."