NZD/USD Forecast October 2, 2014, Technical Analysis

The NZD/USD pair initially rose during the course of the session on Wednesday, but found enough selling pressure above to turn things back around and form a shooting star. The shooting star suggests that we are going to selloff every time we tried to rally. We believe that the 0.80 level is massively resistive, and as a result the market will not get above that area. Initially, we think that the market will more than finally head down to the 0.75 level, which is our longer-term target anyway. We have no plans whatsoever of buying.

The Royal Bank of New Zealand suggested recently that it is much more comfortable with an exchange rate of 0.68, and we think that central bank will get his wish given enough time. With that, we believe that selling rallies going forward will be the way to go, as the US dollar continues to be one of the favored currencies around the world. The fact that the Royal Bank of New Zealand has entered the currency markets and sold off the Kiwi dollar recently also shows just how serious that they are, and that typically means that they will get to where they want to go given enough time.

Keep in mind that this is a relatively send marketplace, at least as far as major pairs go. Because of this, we feel very confident that the central bank will be able to push the market in the direction it wants to go given enough time, and the soft commodity markets out there certainly are not helping the value of the Kiwi dollar anyway. With that being the case we believe that this market will continue to have short-term rallies that are simply selling opportunities as it represents value in the US dollar.

The Asian economies are a bit slow at this moment, and that of course will affect the New Zealand economy anyway. With that being the case and the fact that the Federal Reserve is normalizing its monetary policy, we believe that this market still has a significant downside component to it.