NZD/USD has risen towards 0.5850 after moving above the nine-day Exponential Moving Average (EMA). The pair is trading at approximately 0.5840 during European hours, reinforcing short-term positive momentum.
Bearish Outlook
Despite the rise, the 14-day Relative Strength Index (RSI) suggests a bearish outlook as it remains below 50. Future advances may target the 50-day EMA at 0.5891, aiming to challenge previous highs such as 0.6008 and possibly 0.6121.
Initial support for NZD/USD is at the nine-day EMA of 0.5824. Breaking below this could weaken the short-term momentum and test the downward trendline around 0.5730.
Further declines might explore levels near 0.5485, the lowest since March 2020, observed on April 9, 2025. In daily market statistics, the New Zealand Dollar increased by 0.51% against major currencies.
It showed strength particularly against the Japanese Yen, while the US Dollar saw a drop of 0.22% against the NZD. The analysis highlights the current technical trends and potential price movements in the Forex market.
We are seeing the NZD/USD make a move, trading above the nine-day EMA at 0.5824 for three days now. However, the underlying momentum is still weak, with the 14-day Relative Strength Index (RSI) positioned below the 50 mark. This suggests the recent strength could be fragile and worth watching closely in the next few weeks.
Betting on Continued Gains
For those betting on continued gains, the 50-day EMA at 0.5891 is the key level to watch. A bull call spread, perhaps buying a 0.5850 strike call and selling a 0.5900 strike call with a late October expiration, could capture this potential move. This strategy defines our risk if the bearish sentiment takes over again.
This upward push is partly fueled by US Dollar weakness, as the US government shutdown enters its third day, creating economic uncertainty. We have also seen support from rising dairy prices, with the latest Global Dairy Trade auction on October 1st showing a 2.1% increase in the price index. This provides a fundamental reason for the Kiwi dollar’s recent strength.
Conversely, if the pair fails to hold the nine-day EMA at 0.5824, we should be prepared for a return to the downtrend. A break below this level could be a trigger to initiate bearish positions. A bear put spread could be effective here, potentially buying a 0.5800 put and selling a 0.5750 put to target the trendline support near 0.5730.
We must remember the bigger picture, as the pair is still recovering from the multi-year low of 0.5485 seen back on April 9th of this year. That level represents a significant psychological floor for the market. Any serious breakdown would likely re-test the lows we saw just six months ago.
