- The New Zealand dollar has been very choppy during the trading session on Wednesday, but let’s keep it in perspective here, as it was Christmas Eve, and therefore, liquidity, of course, would have been a bit of an issue.
- Furthermore, when you look at the technical analysis in this market, you can make an argument that we are at a major area of confluence as we are sitting right around the 200-Day EMA, which is an indicator that a lot of people pay close attention to.
With this being the case, I think you have to look at the market through the prism of: Do we break above the top of this range and maybe go to 0.59, or do we break back below 0.58? I think this area where we are at right here, maybe just a little bit lower, is like a major magnet for price, and a lot of people will be watching.
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The US dollar itself is a little bit soft overall over the last week or so, and I do think the market is trying to bully the Federal Reserve into cutting rates or trying to get ahead of that, but we saw that happen multiple times last year, where traders were wrong then also.
The Fed is now starting to cut rates, and New Zealand is much more stable as far as rate decisions are concerned, so this makes a little bit of sense, but there are also concerns about overall risk.
So, with all of that being said, I’m watching the 0.58 level. If we break down below there, then I’m shorting. If we break to the upside, then I may aim for 0.59, possibly even 0.60 after that. I think this moves with risk appetite, and quite frankly, just watch how the dollar is behaving against other currencies; it will tell you which one of these levels is more likely than the others.
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