The NZDUSD currency pair has moved below an important trendline support at 0.5914, a level that has marked higher lows since May. This break suggests a possible shift toward selling momentum, but we need further confirmation. The first target for decline is 0.5903, which is the low from July. If the price declines further, it could enter a swing area between 0.5882 and 0.5892, which has acted as both support and resistance. Another important target is the 38.2% Fibonacci retracement of the rally from April to June, located at 0.58769.

Trading in a Downward Range

The pair has been trading in a downward-sloping range since hitting a peak in June. The recent break below the trendline could strengthen a bearish outlook if prices stay below 0.5914. Current support targets are at 0.5903, 0.5882-0.5892, and 0.58769. Resistance levels to keep an eye on are 0.5914, 0.5667-0.5977, and the 100-bar moving average at 0.59838 on the 4-hour chart. Traders will be watching for continued downward momentum or a potential bounce above 0.5914, which could indicate a bear trap. As of July 30, 2025, the NZDUSD has dipped below the crucial 0.5914 trendline that has held since May. This is a significant technical signal, indicating we should prepare for further declines in the upcoming weeks. Our primary focus should remain on bearish strategies as long as the price stays below this level. This technical weakness is amplified by fundamental pressures on the New Zealand dollar. Last week, the Global Dairy Trade auction revealed a price drop of 3.8%, impacting New Zealand’s export earnings. Reflecting on the Reserve Bank of New Zealand’s meeting earlier in July 2025, their neutral tone suggests they are done raising rates for this year.

US Dollar Strength

At the same time, the US dollar is holding strong after the July Non-Farm Payrolls report showed a gain of 240,000 jobs, exceeding expectations and confirming the strength of the US economy. With US inflation data from June 2025 still at a sticky 3.2%, the Federal Reserve has little reason to signal any shift towards a more dovish stance. This divergence in policy supports a lower NZDUSD exchange rate. For those using options, buying put options with strike prices near the 0.5880 support zone is a straightforward way to position for a further decline. This strategy clearly outlines our risk in relation to the premium we pay. The targets fit well within the swing area between 0.5882 and 0.5892. Alternatively, selling out-of-the-money call credit spreads with a short strike price above the 0.5977 resistance could be effective. This strategy allows us to benefit from time decay and a falling price, as long as the NZDUSD doesn’t rally past that key resistance area. This approach is suitable if we anticipate a slow decline rather than a sudden drop. For futures traders, we should consider entering short positions on any small rally that fails to reclaim the 0.5914 level. A protective stop-loss can be set just above that broken trendline to guard against a possible “bear trap.” Initial profit targets are set at the July low of 0.5903 and then at the 0.5882 support level. Create your live VT Markets account and start trading now.

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