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Given the view that NZD/USD will struggle to break and hold above 0.5800, traders could consider strategies that profit from this resistance. Selling out-of-the-money call options with a strike price at or slightly above 0.5800 for expirations in the next two to three weeks could be a viable strategy. This approach bets on the level holding firm, allowing the options to expire worthless.
This upward pressure on the pair is supported by a divergence in central bank outlooks. We’ve seen New Zealand’s Q3 2025 inflation data come in at 3.8%, keeping the Reserve Bank of New Zealand firmly on hold, while the US Federal Reserve is expected to deliver a “cautious” rate cut soon. This policy difference has been a primary driver for NZD strength against the USD over the past month.
Historical Context
Historically, looking back at the price action in mid-2024, the 0.5800 level acted as a significant pivot point, providing both support and resistance. The current test of this level is therefore critical, but with global risk sentiment still fragile, a sustained breakout seems unlikely without a stronger catalyst. The key support at 0.5740 serves as a crucial line; a break below it would invalidate the current upward bias.
For those anticipating a “bull trap” where the price briefly spikes above 0.5800 before falling back, buying short-term put options could be an effective play. This would capitalize on a quick rejection from that resistance. The implied volatility for NZD/USD options has been relatively contained, making such strategies more affordable at present.
