The New Zealand dollar falls during the week to find buyers below
The New Zealand dollar fell during the week, reaching down to the 0.69 level before turning around a bounce. The resulting weekly candle is a bit of a hammer, which coincides nicely with the hammer from the previous week, and I think we may get a bit of a bounce. If we can break above the 0.70 level, I think the buyers will come in and trying to push this market towards the 0.72 handle. Otherwise, if we break down below the 0.69 level, the market will then likely go down to the 0.68 level underneath which has been supportive more than once. It’s essentially the bottom of the overall consolidation area that we have been in for a couple of years. If we were to break down below the 0.68 level, things could get rather ugly rather quickly.
Otherwise, if we rally from here I think that it’s only a matter of time before sellers come in and punish this market to the downside. I think that the 0.72 level above is going to be pretty resistive, but ultimately I believe that we should also pay attention to the commodity markets in general. The New Zealand dollar of course is very sensitive to commodities, but I think this has more to do with the US dollar an interest rate expectations. We are starting to cool off a bit, so I think that the US dollar may soften a bit over the next several days. However, I do think that eventually the sellers come back.