The NZD/USD pair is stable around 0.5960 after rising for two days. This calm comes as the US Dollar shows weak momentum, with expectations of an interest rate cut by the Federal Reserve in September. The US Dollar Index is low, staying close to a week-low of 98.00. Concerns about the US job market have raised the chance of the Fed changing interest rates, as officials mention possible employment issues.

Stephen Miran Nomination

Stephen Miran’s nomination to succeed Fed Governor Adriana Kugler is significant. In New Zealand, employment data shows a 0.1% decrease and an increase in the unemployment rate to 5.2%. This could lead to monetary policy adjustments by the RBNZ. The NZD/USD aims to rise above its 50-day Exponential Moving Average, which is currently at 0.5967. A 14-day RSI near 50.00 points to a flat trend. If the pair falls below 0.5883, it could drop to 0.5846 or even 0.5800. On the other hand, if it goes above 0.6000, it might reach highs near 0.6040 and 0.6100. Currently, the NZD/USD pair is around the 0.5960 mark. Both the US and New Zealand economies are showing signs of trouble, creating uncertainty over which currency will weaken faster. The pair is just below its 50-day moving average, indicating indecision among traders.

US and New Zealand Employment Data

The US Dollar’s weakness stems from recent labor market data. The non-farm payroll report for July 2025 revealed only 150,000 new jobs, falling short of expectations and increasing speculation about a Federal Reserve rate cut. Markets now see a better than 75% chance of a cut at the September meeting. Meanwhile, New Zealand’s employment figures are concerning, with unemployment at 5.2%, a level not seen since the recovery post-pandemic in early 2021. This poor performance puts pressure on the Reserve Bank of New Zealand to consider rate cuts to support the economy, making the NZD less appealing. Given this tug-of-war, making directional bets seems risky in the short term. We are considering options strategies that can profit from a spike in volatility, regardless of direction. A long straddle looks fitting as it aims to benefit from a significant price change. This strategy involves buying both a call option and a put option with a strike price near the current 0.5960, both expiring after the Fed’s September meeting. Our aim is to capture a breakout from the current tight range, likely prompted by central bank policy announcements. We are not betting on a specific direction but rather on the certainty of movement. We have seen a similar pattern before, notably during the 2019 easing cycle when both central banks cut rates, resulting in volatile yet significant moves. We’ll use the key levels of 0.5880 on the downside and the crucial 0.6000 on the upside as breakout markers. A decisive move past either point may start a larger trend. The next key event to watch is the US Consumer Price Index data release next week, which will heavily impact the Fed’s decisions. After that, we’ll be focused on the Jackson Hole symposium later this month for insights from central bankers. These events likely will increase volatility as we approach the essential September policy meetings. Create your live VT Markets account and start trading now.

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