Forex News
- NZD/USD attracts some follow-through buying amid a weaker USD, though it lacks bullish conviction.
- The RBNZ’s dovish pause last week caps the NZD as traders keenly await the US NFP report on Friday.
- The mixed technical setup further warrants some caution before positioning for any further upside.
The NZD/USD pair gains positive traction for the second straight day on Thursday, building on the previous day's recovery from the 0.5575 area, or a three-week low. The momentum lifts spot prices to an over one-week high, around the 0.5655-0.5660 zone, during the early European session and is sponsored by a broadly weaker US Dollar (USD).
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, sinks to a fresh low since late September amid the post-election fallout. A Democratic sweep in the US midterm elections raised worries about a fiscal gridlock, which could limit government spending and lead to slower economic growth. Furthermore, hopes for an end to the Iran war weigh on crude oil prices, easing inflation fears and exerting pressure on US bond yields. This further undermines the buck and offers some support to the NZD/USD pair.
Meanwhile, the New Zealand Dollar (NZD) might struggle to attract strong follow-through buying on the back of the Reserve Bank of New Zealand's (RBN) major dovish surprise to hold the Official Cash Rate (OCR) steady at 2.75% last week. Traders might also refrain from placing aggressive directional bets and opt to wait for the release of the crucial US monthly employment details on Friday. The popularly known US Nonfarm Payrolls (NFP) report will play a key role in driving USD demand and influence the NZD/USD pair.
From a technical perspective, spot prices retain a short-term negative bias following the post-RBNZ breakdown and subsequent failure near the 100-period Simple Moving Average (SMA) on the 4-hour chart. Meanwhile, the Relative Strength Index (14) has eased back to about 55 from recent overbought territory, hinting that bullish momentum is moderating. That said, the Moving Average Convergence Divergence (MACD) histogram holds marginally positive but flat, suggesting fading upside pressure rather than a robust trend.
Hence, it will be prudent to wait for a sustained break and acceptance below the 0.5580-0.5570 horizontal support before positioning for an extension of the recent well-established downward trajectory from the August monthly swing high. On the topside, immediate resistance is located at the 100-period SMA around 0.5649, followed by the 23.6% Fibonacci retracement at 0.5664. A sustained break above these barriers would be needed to challenge the higher Fibonacci caps at 0.5725 (38.2%) and 0.5775 (50%).
(The technical analysis of this story was written with the help of an AI tool. Know more.)
NZD/USD 4-hour chart
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
- EUR/USD dips below 1.1250, but holds mild daily gains and remains near 0.8% up for the week so far
- German Factory Orders missed expectations, partially offsetting the impulse from risk-on markets and lower Oil prices.
- US ADP employment and Services activity data confirmed the strong momentum of the US economy on Wednesday
The Euro (EUR) appreciated for the second consecutive day against the US Dollar (USD) on Thursday, buoyed by the sharp decline in Oil prices, although it has pulled back from session highs following the release of lower-than-expected German Factory Orders figures. The EUR/USD pair trades just below 1.1250 after pulling back from session highs near 1.1270, but it remains on track to its best weekly performance in three months.
Data released earlier on Thursday showed that German Factory Orders bounced up 4.4% in September, following a 10.1% decline in August but missing market expectations of a 4.8% increase. Year-on-year, orders rose 3.3%, up from August’s 3.2% gain.
US elections send Oil tumbling and give a respite to Eurozone economies
The common currency has been boosted by the sharp decline in Oil prices following the outcome of the US midterm elections. The price of the Brent Oil barrel has plummeted about $20 in the last two days, to levels near $93.00, providing some relief to the Eurozone’s oil-importing economies, amid hopes that the loss of support will force US President Donald Trump to look for an exit from the conflict.
Trump justified the intervention in Iran on Wednesday, but Vice President JD Vance affirmed in a post on X that the war was the main reason for the republican defeat and that President Trump had acknowledged it.
Beyond that, Eurozone preliminary data released on Wednesday revealed that consumer inflation accelerated to a 4% year-on-year pace in October, adding pressure on the European Central Bank (ECB) to keep tightening its monetary policy and providing additional support to the Euro.
In the US, Wednesday’s data added to evidence of the strong economic momentum, but it was unable to lift the US Dollar. ADP Employment figures showed an 86K increase in net jobs in October, beating expectations of a 69K increase. The ISM Services Purchasing Managers Index (PMI) came slightly below expectations but still at levels consistent with solid activity
Economic Indicator
Factory Orders n.s.a. (YoY)
The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.
Read more.Last release: Thu Nov 05, 2026 07:00
Frequency: Monthly
Actual: 3.3%
Consensus: -
Previous: 2.7%
Source: Federal Statistics Office of Germany
Economic Indicator
Factory Orders s.a. (MoM)
The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.
Read more.Last release: Thu Nov 05, 2026 07:00
Frequency: Monthly
Actual: 4.4%
Consensus: 4.8%
Previous: -10.6%
Source: Federal Statistics Office of Germany
ING analysts Warren Patterson and Ewa Manthey say ICE Brent has sold off sharply after the Democrats’ US midterm sweep, as markets price a potentially quicker end to the Iran war and a fading risk premium. They note softer fundamentals, weakening timespreads and still-tight US product inventories, but argue the speed of the recent decline looks overdone.
Oil risk premium seen eroding further
"Oil markets sold off aggressively yesterday, with ICE Brent settling 8.7% lower on the day and below $95/bbl. Selling pressure has only continued in early morning trading today. The outcome of the US midterm elections, with the Democrats winning both the House and Senate has increased hopes that we could see a quicker end to the war in Iran."
"In the absence of escalation, the oil market is likely to continue to slowly give back the risk premium it built in recent months, with oil flows from the Persian Gulf holding up well. This risk premium could disappear even quicker if there’s some sort of agreement between the US and Iran. Fundamentally, the oil market is looking increasingly softer, reflected in the weakening in the physical market as well as timespreads."
"Inventory data from the EIA yesterday showed that US commercial crude oil inventories fell by 865k barrels over the last week. When including releases from strategic reserves total crude, inventories fell by 1.26m barrels. Meanwhile, changes on the refined product side were even more supportive, particularly for middle distillates."
"Despite refineries increasing their utilisation rates by 1.7 percentage points over the week to 94.5%, distillate fuel oil inventories still fell by 3.57m barrels. This took total distillate stocks below 100m barrels for the first time since 2003. Gasoline inventories also edged lower by 222k barrels."
"How all this plays out is still highly uncertain. Therefore, the degree and speed to which the oil market has sold off seems to be overdone. One would think Trump might want to come away with some accomplishments from this war."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Danske Research Team highlights that broad USD weakened as US bond yields declined following the Democratic sweep in the US midterms and a sharp fall in energy prices. The team also flags modestly hawkish labour market signals from the ADP report, which showed stronger job gains and rising wage growth, potentially supporting the Federal Reserve’s cautious stance.
Broad USD weakens as yields and energy prices fall
"Bond yields declined, while broad USD and NOK weakened following both the stronger-than-expected Democratic sweep in US midterms, and the sharp drop in energy prices."
"Also in the US, the ADP private-sector employment report showed an increase of 86k jobs in October, above the consensus of 69k. The report adds to a run of labour market indicators pointing towards continued solid growth in labour demand ahead of Friday's payrolls data."
"An uptick in job-changer wage growth to its highest since March 2024 suggests labour market conditions are tightening and workers' bargaining power is improving, sending a modestly hawkish signal for the Fed."
"On the wires, we will hear from the Fed's Hammack (voter in 2026, non-voter in 2027), Logan (voter in 2026, non-voter in 2027) and Barkin (non-voter in 2026, voter in 2027). Hammack and Logan have been among the most hawkish FOMC participants, both dissenting from the July decision to leave rates unchanged, with Hammack also dissenting in October. As Barkin will vote next year, it will be interesting to hear whether he signals his view on the October rate decision."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Germany's Factory Orders rose in September, suggesting that the country’s manufacturing sector activity gained momentum, according to the official data published by the Federal Statistics Office on Thursday.
Over the month, contracts for goods ‘Made in Germany’ climbed by 4.4% in September after falling by 10.1% in August (revised from -10.6%). Data missed the estimated 4.8% increase.
Germany’s Factory Orders rose by 3.3% year-over-year (YoY) in September, as against the previous increase of 3.2% (revised from 2.7%).
Market reaction
Germany’s Factory Orders data have little to no impact to the Euro (EUR). As of writing, the EUR/USD pair is up 0.28% on the day at 1.1263.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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