The NZD/USD exchange rate has risen for a third session, now around 0.5840. The recent price momentum increased as the pair crossed above the nine-day Exponential Moving Average (EMA).

Market Sentiment And Current Levels

Despite this, the 14-day Relative Strength Index (RSI) is still below 50, indicating a bearish sentiment. If the pair continues upward, it could target the 50-day EMA at 0.5891. If that level is broken, it might move toward 0.6008, the highest point in three months. Initial support is at the nine-day EMA of 0.5824. If this support fails, the pair could drop to 0.5730 or even to 0.5485, the lowest level since March 2020. In currency movements, the New Zealand Dollar (NZD) performed best against the Japanese Yen (JPY), showing a change of 0.51%. It also increased by 0.22% against the USD, although it fell against other currencies. Overall, there is short-term positive momentum, but challenges may arise in the broader market. Traders should consider these factors in their strategies based on current conditions.

Impact Of Economic Factors

The NZD/USD shows short-term strength, trading near 0.5850 after moving above its nine-day moving average. However, the overall trend still appears bearish with the 14-day RSI under 50, suggesting this uptrend may be a temporary rally in a downward trend. Recent strength in the Kiwi is partly due to improving domestic data. The Global Dairy Trade index rose by 2.9% in the last September auction, and the Reserve Bank of New Zealand is taking a tough stance on inflation. These factors help explain the currency’s bounce. Meanwhile, the US Dollar (USD) remains weak because of a partial government shutdown and a slowing labor market. Last month’s Non-Farm Payrolls showed only 165,000 jobs added, making it more likely that the Federal Reserve will pause its rate hikes. This uncertainty in the US is supporting the NZD/USD pair. Looking ahead, the 50-day EMA at 0.5891 will be a key level to watch. Traders might consider buying call options with a strike above 0.5900 to capture a potential breakout while hedging with put options below the 0.5824 support level. This strategy can help manage risk if the rally loses momentum. Keep in mind the significant downward pressure from earlier this year when the pair reached a low of 0.5485 in April 2023. If the current rally fails before hitting the 0.5891 resistance and falls back below the nine-day EMA, it would signal that the bearish trend is likely to resume. In that case, we would aim to increase short positions. Create your live VT Markets account and start trading now.

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