The NZDUSD declined further last week, dropping below its rising 100-day moving average set at 0.59455. In July, attempts to breach this level on the 16th and 17th were temporary, leading to upward reversals.
This time, maintaining a position below the 100-day MA is essential for sellers aiming to retain dominance. If the price moves above the 100-day MA, bearish momentum may weaken, causing a potential shift towards a bullish trend.
Downside Potential
On the downside, a low on Friday tested the upper boundary of a crucial swing zone between 0.5845 and 0.5860, which also acts as the floor of a broader range since April. A clear break below this zone will reinforce the bearish outlook, leading towards the 200-day moving average at 0.58147. This point is essential for bears who want to gain further momentum and control.
Key technical levels include resistance at the 100-day MA of 0.59455, support at the swing zone of 0.5845–0.5860, and a target below at the 200-day MA of 0.58147.
Given today’s date, August 4, 2025, we are watching the NZDUSD closely after it broke below its 100-day moving average at 0.59455 last week. Unlike the quick reversals we saw in July, this breakdown appears more serious. The move is supported by fundamentals, as recent data showed New Zealand’s second-quarter GDP growth slowed to just 0.2%, weakening the case for the Reserve Bank of New Zealand to hold interest rates high.
Bearish Strategies
This technical weakness suggests traders should consider bearish strategies in the coming weeks. As long as the price remains below the 100-day moving average, we see an opportunity to hold or enter short positions. A sensible risk management strategy would be to place stop-orders just above 0.59455 to protect against a sudden reversal.
The next key area to watch is the support zone between 0.5845 and 0.5860. This level has served as a solid floor for the market since April of this year. The US dollar has also been gaining strength, with last week’s non-farm payroll report showing a surprising addition of 215,000 jobs, reinforcing the Federal Reserve’s patient stance on rates.
A convincing break below this 0.5845 support would be a strong signal that the bearish trend is accelerating. Such a move would strengthen our conviction that sellers are taking control of the market’s direction. Historically, when major multi-month support levels like this fail, it often leads to a quick follow-through from sellers.
If that support gives way, the next logical target is the 200-day moving average, currently near 0.58147. For derivative traders, a break below 0.5845 could be a trigger to buy put options with a strike price near this 200-day MA. Reaching this level would confirm that a more significant downtrend is underway.
