- In my daily analysis of the major currency pairs, the NZD/USD pair captures my attention due to the fact that we have seen a lot of upward trajectory, but we still have quite a bit of resistance above that could cause major issues.
- With that being the case, I think you have to look at this through the prism of a market that is on the precipice of trying to make a bigger move, that simply cannot do so quite yet.
I will continue to look at the 0.5950 level with great interest, especially as we start to grind toward it. This is an area that’s been both support and resistance previously in the past, and the fact that we did pull back just a little bit during the early hours after an initial surge higher on Friday does suggest to me that perhaps this is a region that will continue to hold as resistance.
It’s also worth noting that in other major currency pairs such as the AUD/USD and the EUR/USD, we have seen the US dollar claw back some of the initial losses at the open. In other words, it appears that the New Zealand dollar is either some type of outlier, or a pullback is more likely than not.
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You always have to keep in mind that the New Zealand dollar is highly sensitive to commodity prices, particularly agricultural ones. New Zealand sends a massive amount of its exports into Asia, so it’s also highly sensitive to what’s going on in Asia. As things stand right now it’s worth noting that the Chinese economy seems to be a little bit limp if you look under the hood, as we are starting to see the CCP go back to the old playbook of trying to juice the housing market. China has millions of empty units that serve no purpose other than trying to inflate the bubble that is the Chinese economy. If it starts to slow down a bit, that has a direct influence on New Zealand.
If we could break above the 0.5950 level, then the New Zealand dollar could go looking to the 0.60 level, but the higher we get from here, the more likely we are to see a “fade the rally move.”
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