Technical Analysis
The NZDUSD is ending the week with a moderate bearish bias, trading below key technical levels. We are seeing the price below the 100-day moving average and also under the 100 and 200 bar moving averages on the four-hour chart. This suggests that downward momentum could continue in the near term.
This technical weakness aligns with recent fundamental data from New Zealand. Last week’s figures showed New Zealand’s Q2 GDP growth slowed to 0.3%, while the most recent Fonterra Global Dairy Trade auction on August 5th saw average prices dip by 2.8%. The Reserve Bank of New Zealand also held rates steady earlier this month, but its statement had a more dovish tone than anticipated.
Conversely, the US dollar continues to show resilience. The US July Non-Farm Payrolls report, released on August 1st, added a solid 205,000 jobs, and recent Federal Reserve statements have reinforced their commitment to maintaining current interest rates through the end of the year. This policy divergence is a key factor weighing on the NZDUSD pair, much like it did throughout 2024.
Strategic Considerations
Given this environment, derivative traders might consider buying put options on the NZDUSD. We believe puts with September 2025 expiration dates and strike prices below the current spot rate could offer a favorable risk-to-reward profile. This strategy would profit from a continued slide in the currency pair over the next several weeks.
We are looking at key support levels from early 2025 as potential targets. A decisive break below the year-to-date low could accelerate the move downwards. Traders should monitor next week’s US retail sales figures, as a strong number would likely strengthen the dollar and add further pressure here.
