- The New Zealand dollar initially tried to rally during the course of the trading session on Monday to break above the 200 day EMA as well as the 50 day EMA but has since fallen rather hard.
- This makes a certain amount of sense considering that interest rates in America remain rather high.
- We had already been drifting a bit lower anyway, as we approach support, which I presently see at the 0.6050 level.
It'll be interesting to see how this holds up. If we do in fact turn around and rally, then the market will try to break back above the 50 day EMA. On the other hand, if we were to break down below here, then the 0.60 level would be your next target. Anything below there would be disastrous for the New Zealand dollar, perhaps sending the market down to the 0.5850 level eventually.
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I do think that at this point in time, it looks like the New Zealand dollar is a little bit tired, but it all comes down to the potential support at the 0.6050 level. If we turn around and break above the highs of the last three sessions in a row, which is basically the 0.6110 level, then we could open up the possibility of a move to the 0.62 level.
Choppiness Possible
I expect a lot of choppiness and that does make a certain amount of sense considering that New Zealand is considered to be a risky economy, although it's a major one. The reality is the currency is much smaller than the greenback and therefore people tend to run towards it when they are willing to take risk. In general, this is a market that's testing the bottom of an overall consolidation area and it'll be interesting to see how this plays out. It is because of this that I think you should be watching the New Zealand dollar over the next day or two for a potential trading signal.
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