The New Zealand Dollar (NZD) is expected to range between 0.5740 and 0.5800. We’ve noticed a slight increase in upward momentum. For NZD to keep growing, it needs to close above 0.5800.

Short-Term Perspective

In the next 24 hours, NZD may test the resistance level at 0.5770, but it may not break through. Support is at 0.5735, and if it dips below 0.5725, that would suggest a loss of upward momentum. Recently, NZD fluctuated and closed at 0.5747 after peaking at 0.5780, indicating some volatility but no new developments. Looking at the next 1 to 3 weeks, NZD has been stable since mid-month. It was expected to stay between 0.5700 and 0.5770. Although it briefly exceeded 0.5770, it returned to a lower close. There’s a slight increase in momentum, but to rise further, NZD must close above 0.5800. The chances of this happening are slim unless the strong support at 0.5715 is broken. In the coming weeks, we foresee the New Zealand Dollar trading in a narrow range between 0.5740 and 0.5800. This reflects market hesitation, with traders weighing the Reserve Bank of New Zealand’s decision to keep the Official Cash Rate at 5.50% against a weakening global outlook. Derivative traders might explore low-volatility strategies, like selling short-dated strangles with strikes outside this expected range. While there is a slight uptick in momentum, it isn’t strong enough for a sustained rally yet. New Zealand’s third-quarter inflation data, which showed an annual rate of 3.1%, remains above the central bank’s target, providing a baseline for the Kiwi. The Global Dairy Trade index’s modest 1.5% increase in its latest auction also supports this, preventing a major sell-off. For the US dollar, recent economic data hasn’t given the market a clear signal. The Non-Farm Payrolls report from October 3rd showed job growth slowing more than expected, reducing chances for another Federal Reserve rate hike in 2025. This explains why the NZD/USD pair is struggling to rise convincingly above 0.5800.

Strategic Considerations

A cautious approach seems wise because a significant catalyst is necessary to break the current deadlock. A strong weekly close above 0.5800 would indicate solidifying upward momentum, making call options appealing. On the other hand, breaking the strong support level at 0.5715 would suggest the neutral phase is ending, which could lead to buying put options. Create your live VT Markets account and start trading now.

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