NZD/USD Forecast December 20, 2011, Technical Analysis

NZD/USD fell on Monday as the commodity trade got hit. The markets sold all risk assets, and the Kiwi is always going to lose in that situation. The NZD/USD is very sensitive to this trade as the Dollar is the ultimate “safe haven” for currency traders.

The 0.75 level below could provide some support, but the gap from a couple of weekends ago still hasn’t been filled. The markets are very headline sensitive as the EU situation suggests that the bad news hasn’t ended. The breakdown of all risk assets should continue, and the low volume that we see in the markets could provide fireworks in the near future as this pair is already less liquid than most of the majors. The pair has us selling rallies, and not buying at all as the headline risks are too great. We like selling also if the gap gets broken below as well, as it would be a massively bearish signal.