The NZD/USD pair fell initially during the session on Tuesday in order to retest the 0.81 handle as support. The resulting balance formed a hammer in this currency pair, and we should see continued bullishness as the stock markets around the world do quite well. Remember, the Kiwi dollar is quite often influenced by risk appetite, and we certainly seem to have some at the moment.
The 0.83 level above looks to be resistive, and on top of that it appears to be the top of a consolidation range. However, in the short-term I believe there will be opportunities to go long in this pair as the resilience shown at the 0.81 level is telling. After all, the US dollar is being devalued by the Federal Reserve and should continue to fall in value over the long term.
Barring any nasty headlines, it appears that the risk appetite is growing at the moment. This would figure well with a quick move up in this currency pair of about 100 pips. This allows for a short-term trade, but it is with the overall trend in that of course is important.
0.83 will be crucial
If the various stock indices and the commodity markets around the world do well during the session, the 0.83 level should give way. Once it does, I believe that the Kiwi dollar becomes more of a buy-and-hold type of proposition.
When times are good, this is one of my personal favorites as far as currency pairs go. This is because the liquidity in the New Zealand dollar is much less than the Australian dollar. However, it does tend to move in lockstep with its cousin across the Tasman, and as such you get more of a "bang for your buck." The Australians are also looking to cut rates twice over the next six months or so, and as such this will make the proposition of owning the Kiwi dollar much more attractive than the Aussie. Because of this, I believe that the Kiwi dollar will win by default if you will.
I'm willing to go long of this pair once we cross the 0.82 handle, and will be very interested in seeing what it does once we get the 0.83. If we can get above that level, I think this is a pair that has a long way to go. As for selling, I really don't have any interest as there are far too many areas below that could cause a bit of support.