Insights 
VT 
The New Zealand Dollar (NZD) is anticipated to fluctuate within the range of 0.5740 to 0.5800. A slight increase in upward momentum has been observed. For continued growth, NZD must close above 0.5800.
Short Term Perspective
Over a 24-hour perspective, NZD may test the resistance at 0.5770, but a clear break seems unlikely. Support lies at 0.5735, with a breach at 0.5725 indicating a loss in upward pressure. NZD has fluctuated, closing at 0.5747 after reaching 0.5780, showing volatile price actions without new insights.
From a 1-3 weeks viewpoint, NZD has been held neutral since mid-month. Initially projected to remain between 0.5700 and 0.5770, NZD exceeded 0.5770 but returned to close lower. A slight momentum increase is noted, yet for further rise, NZD must close above 0.5800. The chance of this is limited unless the ‘strong support’ at 0.5715 is breached.
For the coming weeks, we see the New Zealand dollar trading sideways, likely contained between 0.5740 and 0.5800. This reflects market indecision, with traders balancing the Reserve Bank of New Zealand’s commitment to keeping its Official Cash Rate at a restrictive 5.50% against a softening global outlook. Derivative traders should consider strategies that can profit from low volatility, such as selling short-dated strangles with strikes outside this expected range.
We are seeing a slight increase in upward momentum, but it lacks the strength for a sustained rally just yet. New Zealand’s third-quarter inflation data, which we saw earlier this month come in at an annual rate of 3.1%, is still stubbornly above the central bank’s target band, providing a floor for the Kiwi. Looking back at the Global Dairy Trade index, its modest 1.5% gain in the last auction also offers some support, preventing a significant sell-off.
On the US dollar side, recent economic data has not provided a clear direction for the market. After the Non-Farm Payrolls report on October 3rd showed job growth slowing more than anticipated, expectations for another Federal Reserve rate hike in 2025 have diminished. This dynamic helps explain why the NZD/USD pair is meeting resistance and failing to break convincingly above the 0.5800 level.
Strategic Considerations
A patient strategy appears most prudent, as a major catalyst is needed to break the current equilibrium. A decisive weekly close above 0.5800 would be our signal that the upward momentum is solidifying, making call options an attractive play. Conversely, a breach of the strong support level at 0.5715 would suggest the neutral phase is over and could trigger a move to purchase put options.
