NZDUSD slides as RBNZ unexpectedly holds; rebound loses steam

On October 28, the Reserve Bank of New Zealand left its cash rate at 2.75%, a result markets did not expect; a 25-basis-point increase to 3.00% had been heavily priced in. The estimated probability of a hike ahead of the announcement stood near 88%, and some reports said an increase was nearly fully discounted.

The hold was still accompanied by a hawkish tilt:

• The 4–3 vote was tight, with three policymakers wanting the cash rate increased to 3.00%.

• More tightening is still probable: all members agreed, depending on the outlook, that rates would probably need to rise.

• Inflation is still a worry. Yearly CPI softened to 3.7%, yet a climb to 4.4% is expected in Q4, driven mainly by fuel costs. Core inflation and wider price pressures stay high.

• The mixed recovery argues for patience: exports continue to hold up well, while household spending and domestic demand remain weak.

On the hourly timeframe, buyers are defending support with resistance overhead.

NZDUSD dropped steeply following the decision, sliding from roughly 0.5682 to 0.55773 and then bouncing to 0.56181.

The sell-off briefly moved under the 0.55791 swing area, a level marked by the lows of October 5, 8 and 13. Sellers were unable to keep the price below it, and the October 14 cycle low at 0.55644 stayed untouched. The failed breakdown below 0.55791 gave buyers a foothold and triggered the rebound.

But the bounce still has ground to cover before buyers can take firmer control. The next major upside obstacle is the 0.56256–0.56330 swing zone. A push above it, with the price able to remain there, would boost buyer confidence.

While the price stays below that zone, sellers remain in charge, leaving 0.55791–0.55773 and then 0.55644 as the downside objectives.

On the five-minute timeframe, four rallies have stalled at the same retracement mark.

The bearish bias is reinforced by the five-minute action.

One way to gauge a sharp downward move is to see how much of it gets retraced. The 38.2%–50% correction zone acts as a handy measure: when buyers fail to force the price above it, the recovery stays capped and sellers keep control.

To this point, four distinct bounce efforts have run into selling around the 38.2% retracement at 0.56181. That repeated rejection offers traders a well-defined marker to follow, as well as a nearby risk level for those leaning against the move.

Further up, the 50% midpoint at 0.56308 sits within the hourly swing region of 0.56256–0.56330, which strengthens the significance of that resistance band.

Where might control shift between buyers and sellers?

So far, the lows have been defended, yet sellers are still containing any bounce.

A climb above 0.56181 would be the initial sign that imminent downside pressure is easing. A hold above the 0.56256–0.56330 resistance zone would offer firmer proof that buyers are regaining the upper hand.

In the meantime, the rebound is just a correction inside the steep decline. Another drop under 0.55791–0.55773 would return the 0.55644 cycle low to the spotlight.