The NZD/USD pair had an interesting session on Thursday as we went back and forth, only to finish up essentially unchanged. What's interesting is that we sold off so drastically during the Wednesday session that one would assume there would be some follow-through. The follow through is very limited, and this just proves the solid wall of support at the 0.83 level is there and still active.
We have been consolidating between 0.83 and 0.85 for some time now; with the 0.85 level starting its "zone" that was the 0.8450 level. We did break above the bottom and through the 0.85 level for the briefest moment last week, but as you can see we have pullback drastically from that point. However, the action on Thursday certainly justifies us believing that the buyers are still out in full force.
"Risk on, risk off"
This pair is one of the more interesting pairs to me when we are in the typical "risk on, risk off" type of market that we have seen over the last five years. Because of this, I feel that this market is a great barometer to what's going on in the overall markets, and as a result the fact that we saw a bit of bullishness towards the end of the American session in several different markets suggests that the buyers stepped in, and this market should get a bit of a boost as a result.
Adding that to the fact that the Federal Reserve continues to print Dollars, and you have a recipe for this market to go much higher. However, the head of the Reserve Bank of New Zealand did state recently that he was willing to intervene in the Forex markets if the Kiwi dollar continues to appreciate as quickly as it was. He was stating that the Kiwi dollar was not a "one way bet." This of course had the market selling off during the Wednesday session, but it may have been a bit overdone as he simply stated that, and didn't actually do anything. The markets are very concerned about currency wars right now, but the truth is that the RBNZ couldn't fight the Federal Reserve in the battle of devaluation if it wanted to.
