The NZDUSD pair saw an increase, but it hit a barrier at the 100-day moving average of 0.59596. This rise was mainly due to a general sell-off of the US dollar, reaching a high of 0.59586 before sellers stepped in. Right now, the market is caught between the resistance of the 100-day moving average and support at 0.59376, a level that reflects previous highs from mid-August. If the price breaks below this support, it could drop toward the 200-bar moving average on the 4-hour chart, which is at 0.59088.

Opportunity To Challenge The 100-Day Moving Average

If buyers can hold support, we might see another chance to test the 100-day moving average. If this level is successfully surpassed, market momentum could shift in favor of the buyers. The NZDUSD is currently facing a crucial resistance point at the 100-day moving average around 0.5960. This level has stopped recent gains stemming from the weakened US dollar. We are watching closely to see if support stays strong near the 0.5938 level. Given this situation, breaking above the 100-day moving average could be a signal to buy call options, anticipating a further rise. This expectation is backed by recent US inflation data, which has cooled to 2.8%, raising the likelihood that the Federal Reserve will keep interest rates unchanged at their meeting on September 25th. Additionally, the latest Global Dairy Trade auction saw a slight 1.2% increase in prices, giving a small boost to the kiwi.

Breaking Below Support

On the other hand, if the pair falls below support at 0.5938, it could be a good opportunity to buy put options, targeting a drop to 0.5909. We recall a similar consolidation in the third quarter of 2024 when a stronger-than-expected US jobs report led to a significant breakdown from a key technical level. If there’s unexpectedly strong US economic data in the coming weeks, it could trigger a repeat of that event. For those who think the pair will stay range-bound between these key levels, selling an iron condor could be an effective strategy to earn from time decay. This method takes advantage of the current tug-of-war between a likely pausing Federal Reserve and a more hawkish Reserve Bank of New Zealand. With implied volatility being relatively low, this option is appealing if we don’t expect any major price movements before the next central bank announcements. Create your live VT Markets account and start trading now.

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