### The New Zealand Dollar’s Short to Mid-Term Outlook In the next 1-3 weeks, the New Zealand Dollar (NZD) is expected to face challenges after reaching the 0.5690 mark. Its drop to 0.5685 raises concerns that it might soon test 0.5660. However, if it climbs above 0.5750, a further decline is less likely. The FXStreet Insights Team gathers market observations from experts and provides business notes and additional insights. This article serves informational purposes and is not a recommendation to buy or sell assets. Always do thorough research before making any investment decisions, as there are risks involved, including the potential loss of principal. Given the current outlook, we expect the NZD/USD pair to trade between 0.5690 and 0.5730 shortly. However, downward pressure remains, making it likely to test the 0.5660 level in the coming weeks. This viewpoint is supported by recent data showing that New Zealand’s Q3 inflation has cooled to 3.8%, reducing the pressure on the Reserve Bank of New Zealand to maintain its previously aggressive stance. ### US Dollar Influence The potential weakness in the NZD is tempered by a weaker US dollar, influenced by expectations of Federal Reserve easing. The latest Consumer Price Index (CPI) report for September shows an inflation rate of 2.9%. Market expectations now suggest there’s over a 70% chance of a rate cut by the Fed before the end of 2025. Additionally, ongoing tensions in US-China trade are complicating the outlook for the dollar. For traders expecting a decline, buying put options with a strike price near 0.5660 is a clear way to position for this drop. The cost of the option premium will be the maximum potential loss. This strategy becomes straightforward if the price breaks decisively below the current support level of 0.5690. Since range-bound trading is likely before a potential decline, a bear put spread might be a better approach. This involves buying a put option at a higher strike, like 0.5700, and selling another put at a lower strike, such as 0.5660. This strategy reduces the initial cost of the position but also limits maximum profit. We must also consider that this downward movement might not occur. The key resistance level to watch is 0.5750; if the price breaks above this, it could invalidate the bearish outlook. Traders may consider using this level as a stop-loss for short positions or as a trigger to start bullish positions through call options if momentum shifts. Create your live VT Markets account and start trading now.

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