- The New Zealand dollar has rallied a bit against the US dollar during trading on Thursday, in a bid to recover some of the losses from the Wednesday session.
- The 0.6350 level above is a significant resistance barrier, as it had previously been a significant swing high.
- This is an area that has been difficult to break above, and I think this will continue to be the case. I don’t think it is likely to be easy, but I also think it won’t be impossible.
So now as I look at the chart, I recognize this is a situation where if we can break above, there, then the markets could really go higher at that point, perhaps reaching the 0.65 level. Underneath we have the 0.6250 level offering support. I think that continues to be an area of pretty significant interest. Breaking down below that level then opens up the possibility of the market perhaps reaching down to the 50 day EMA, maybe even the 200 day EMA, which is closer to the 0.61 level, which of course is, a round number, but also where we see the 200 day EMA approaching.
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The Fed and the Destruction of the Greenback
Ultimately, I think we've got a scenario where as long as the Federal Reserve is likely to continue cutting rates and the market believes it, then the New Zealand dollar will probably be a beneficiary. Unless and this is a big question at the moment. The interest rate cuts are due to some type of economic concern. They're not going to do the so-called soft landing if that's the case. Ironically, the US dollar will probably be bought as people run into the US Treasury market. This is the first place that a lot of people will get involved in, as the Treasury market continues to be a safe haven for larger firms, as it is one of the most liquid and stable markets in the world.
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