The New Zealand dollar fell initially during the day on Tuesday, reaching down to the 0.7275 handle, but bounced enough to reach towards the 0.73 level. A break above there could send this market looking towards the downtrend line above, which is based off the weekly chart. Ultimately, this is a market that continues to be volatile, and of course will react to the Federal Reserve Meeting Minutes coming out later today, as a more hawkish tone could put downward pressure on this pair. If we were to break down below the 0.7250 level underneath, the market could continue to drop from here and then reach down to the 0.72 handle. This is a market that continues to be very volatile, as the New Zealand dollar typically is. After all, it is one of the least liquid major currencies, so I think that will continue to be the case.
Potential breakout
If we were to break above the downtrend line on the weekly chart, I believe that the market will go looking for the 0.75 handle. However, a lot of the commodity markets out there are looking, soft, and it makes it likely that the New Zealand dollar will continue to struggle. The massive amount of volatility in this pair does make it more of a short-term trading type of environment, and I think that will continue to be the case unless of course we break out to the upside. If you can break above there, the market should pick up a bit of momentum, as the markets will recognize that the buying pressure has continued. The market could turn around of course if the Federal Reserve looks more hawkish than anticipated, as that should bring in buying pressure for the US dollar overall.