The New Zealand dollar has rallied a bit during the course of the week, breaking above the 0.74 level at one point, but has pulled back a bit as we continue to see selling pressure in this general vicinity. It’s not until we break above the 0.75 handle that I am willing to buy this market from a longer-term standpoint quite yet.
The New Zealand dollar continues to struggle above, and I think it’s only a matter of time before we roll over. We are overextended, so I think that the rollover is necessary, even though I do believe that eventually the US dollar falls. Market participants continue to be choppy overall, and I believe that the market could stay within the consolidation area, and I think that the market being overbought is a very real possibility this point. It’s not until we break above the 0.75 level that I would look at this as a market that should show very positive momentum.
As far as selling is concerned, I would be cautious about doing so, but would not surprise me at all to see this market turn around. Ultimately, I think that the New Zealand dollar is a bit overdone, so I think if nothing else we will revert to the mean. When I look at this pair, I think that the 0.68 level underneath is massive support. I would keep my position a bit small, because this market does tend to move rather rapidly, keep in mind that the commodity markets also have a direct influence on this market also. Pay attention to the soft commodities, such as grains, as it tends to have a direct influence. There is a lot of noise just above, I think it’s going to take several attempts to finally break out.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.