The NZDUSD pair experienced an increase, but the rally was halted at the 100-day moving average of 0.59596. The currency pair rose due to the broad selling of the US dollar, with the high reaching 0.59586 before sellers intervened.
Currently, the market seems stuck between the 100-day moving average resistance and support at 0.59376, a level defined by previous highs in mid-August. A break below this support could lead to a move towards the 200-bar moving average on the 4-hour chart, positioned at 0.59088.
Opportunity To Challenge The 100 Day Moving Average
If buyers maintain support, there might be another opportunity to challenge the 100-day moving average. Successfully breaching this level could shift the market momentum more favourably towards the buyers.
The NZDUSD is currently testing a significant ceiling at the 100-day moving average around 0.5960. This level has stopped the recent rally, which was fueled by broader US dollar weakness. We are now watching to see if support holds near the 0.5938 swing zone.
Given this setup, a break above the 100-day moving average could be a signal to consider buying call options, anticipating a move higher. This view is supported by recent US inflation data, which showed a cooling to 2.8% and increases the probability that the Federal Reserve will hold rates steady at its meeting on September 25th. The latest Global Dairy Trade auction also saw a modest 1.2% price increase, providing a slight tailwind for the kiwi.
Breaking Below Support
Conversely, if the pair breaks below support at 0.5938, it could be an opportunity to buy put options, targeting a move down toward 0.5909. We remember a similar consolidation back in the third quarter of 2024, when a stronger-than-expected US jobs report caused a sharp breakdown from a key technical level. Any surprisingly robust US economic data in the coming weeks could trigger a repeat of that scenario.
For those expecting the pair to remain range-bound between these key levels, selling an iron condor could be an effective strategy to collect premium from time decay. This approach capitalizes on the current tug-of-war between a potentially pausing Federal Reserve and a more hawkish Reserve Bank of New Zealand. Implied volatility is relatively low, making this an attractive option if we don’t expect a major breakout before the next central bank announcements.
