**US Tariff Relief Looking Unlikely** The New Zealand dollar is struggling due to unlikely US tariff relief. A 15% tariff is essentially a tax on a key part of our export economy, limiting the potential gains for the NZD/USD pair. Traders should be cautious about any rallies in the near future. Recent economic data supports this view. According to Stats NZ, export volumes to the United States dropped by 0.8% in the second quarter of 2025 due to these trade barriers. Additionally, the Reserve Bank of New Zealand noted “global trade friction” as a major risk to its growth forecasts in a statement last week. **US Dollar Stays Strong** On the other side, the US dollar remains strong. In its July 2025 meeting, the US Federal Reserve indicated it plans to keep interest rates “higher for longer,” as core PCE inflation continues at 2.8%, above the target level. This difference in interest rates between the US and New Zealand will likely keep supporting the dollar. We saw a similar situation from 2018 to 2019 when rising US-China trade tensions consistently put pressure on the Kiwi dollar, driving NZD/USD lower even when New Zealand’s economy looked solid. History shows that during trade protectionism, commodity currencies like the NZD often underperform. Given this outlook, traders might consider strategies that benefit from limited upside or a decline in the NZD/USD. Buying put options on the New Zealand dollar can offer downside risk with limited exposure. Another approach is selling out-of-the-money call options to collect premiums by betting that the pair won’t surpass key resistance levels in the coming weeks. The 0.6250 level, tested and rejected in late July 2025, is now an even stronger barrier for the currency pair. If the NZD/USD approaches this level, it could be a signal to initiate bearish positions. We expect the NZD/USD to remain within a range, with downward pressure as long as these tariffs stay in place. Create your live VT Markets account and start trading now.

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