NZD/USD Forecast December 20, 2012, Technical Analysis

The NZD/USD pair had a very negative session on Wednesday as the “risk off” trade came back into play for the session. We think part of this is predicated upon the so-called “fiscal cliff” talks in the United States, and the fact that they seem to be going nowhere fast. If that’s the case, the United States could go into a recession, and this would of course put a severe beating on risk assets around the world. I can think of no currency units traded with relatively high frequency that represents “risk on” more than the New Zealand dollar. Because of this, it makes sense that the pair fell. However, we do see digital for significant support at the 0.83 handle, as well as several levels below. Because of this, we are not interested in selling, but would rather buy a supportive looking candle at one of the big round numbers below.