Bank of America has advised clients to buy the New Zealand dollar against the U.S. dollar, setting an entry at 0.5957, a target of 0.62 and a stop loss at 0.58 for the trade into the fourth quarter of 2026.
The recommendation reflects a broader shift in Bank of America’s U.S. dollar positioning, as the bank has added short positions on the greenback amid elevated uncertainty over Treasury and Federal Reserve policy credibility. BofA does not anticipate the U.S. Treasury will abandon its current efforts to contain borrowing costs, including potential foreign exchange intervention and long-end bond buybacks.
The bank expects short U.S. dollar positions versus high-beta foreign currencies to outperform in the near term, particularly if the Federal Reserve absorbs increased bill issuance. The New Zealand dollar outlook is further supported by expectations that the Reserve Bank of New Zealand will deliver two additional rate hikes, reinforcing the currency’s attractiveness.
Bank of America also cited weather-driven risks to global food supply chains as a secondary tailwind for the New Zealand dollar, adding to the fundamental support for the trade recommendation.
