**A Weakened US Dollar** The New Zealand Dollar (NZD) may drop, possibly testing 0.5740, with strong support expected at 0.5720. Last week, the NZD traded quietly within the range of 0.5752 to 0.5778, showing signs of increased downward momentum. Resistance levels are found at 0.5770 and 0.5780. In recent weeks, the NZD reached a high of 0.5853 but has since pulled back. This trend could continue, especially with resistance at 0.5800, which may lead to further declines. Analysts at UOB Group indicate that while downward pressure is present, 0.5720 could hold as strong support. A weakened US Dollar and ongoing geopolitical tensions have affected other currencies and commodities. The GBP/USD pair has gained, reaching intraday highs after weak US economic data. Gold prices have also increased, influenced by geopolitical issues and disappointing US manufacturing statistics. In the cryptocurrency market, Bitcoin and Ethereum remain bullish due to ETF inflows. Ripple has risen above $2.13, driven by investor interest in risk assets. Traders are currently assessing geopolitical factors and economic data that could impact market movements in the weeks ahead. **Derivative Positions and Strategy** The downward trend for NZD/USD suggests that a move to 0.5740 is likely soon. The pair struggled to maintain gains after peaking at 0.5853 last month, indicating that the pullback may continue. Derivative positions should be set up to take advantage of this expected weakness. This outlook is supported by mixed results from the Global Dairy Trade auctions—an important indicator for New Zealand’s economy—alongside the Reserve Bank of New Zealand’s cautious stance. These factors suggest limited potential for the kiwi’s value to surge, reinforcing a technical forecast for a weaker currency. For a direct bearish position, we might consider buying put options with a strike price close to 0.5750, expiring within the next three weeks to match the predicted timeline for this move. This strategy allows for downside exposure while minimizing risk, particularly if the strong support at 0.5720 triggers a sudden rebound. Alternatively, selling call options above the strong resistance level at 0.5800 offers another positioning method. This strategy will profit if the NZD/USD pair remains below that level, which seems likely given its recent sharp rejection from higher prices. The premium collected offers protection and benefits from both a declining price and time decay. It’s crucial, however, to monitor the US side closely. Today’s weak ISM manufacturing data typically would weaken the US dollar, but current geopolitical tensions are creating demand for safe-haven assets, which is keeping the dollar supported. This situation is currently overshadowing poor economic data, benefiting a short NZD/USD position. Create your live VT Markets account and start trading now.

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