Insights 
VT 
The Technical Rejection
The technical rejection from the 200-day Simple Moving Average cautions bulls. Upcoming comments from Fed Chair Jerome Powell could provide further direction for the USD. The table indicates the USD was strongest against the Swiss Franc, with the EUR, GBP, and JPY also exhibiting varied changes. In the stated currency pairings, USD showed particular weakness against AUD, CAD, and NZD among others. The pair’s performance will be influenced by further developments and absence of major US macroeconomic data due to the governmental closure.
We are seeing a familiar pattern in NZD/USD today, with the pair attempting a recovery towards 0.5800 due to short-term US Dollar weakness. This mirrors past instances where risk sentiment improved, but we must consider if the underlying economic fundamentals support a sustained move higher. The key question is whether this is a temporary relief rally or the start of a new trend.
The Reserve Bank of New Zealand’s dovish stance remains the primary weight on the Kiwi dollar. While their surprise 50 basis point cut is an event from the past, the sentiment carries forward to today in 2025, as we now see inflation finally nearing its target after the aggressive hikes of 2022-2023. With New Zealand’s latest quarterly GDP figures showing a contraction of 0.2%, the market is pricing in a high probability of RBNZ rate cuts by early next year, which will likely cap the NZD’s strength.
On the other side of the pair, bets on Federal Reserve rate cuts are also firming up, explaining the current USD pullback. US inflation has cooled substantially, with the latest headline CPI figure from September 2025 coming in at 2.8%, and job growth is showing signs of slowing. This situation is reminiscent of past cycles where fears of a US government shutdown or economic slowdown have temporarily weakened the dollar.
Considering Options for NZD/USD
Given this conflict between a weak NZD outlook and temporary USD softness, we should consider using options to express a bearish view with controlled risk. Buying NZD/USD put options with an expiration in the coming weeks allows us to profit from a potential move back towards the recent lows below 0.5750. This strategy is effective because it limits our maximum loss to the premium paid while offering significant upside if the pair’s rally falters as expected.
From a technical standpoint, we must watch the 200-day moving average, currently sitting near 0.5950, as a critical resistance level. We saw this average cap rallies repeatedly throughout 2023, and any approach toward this level in the coming weeks should be viewed as a potential selling opportunity. Therefore, we can use this rally to establish bearish positions, such as put spreads, anticipating that the longer-term downtrend will resume.
