The NZD/USD pair broke higher during the session on Friday initially, but turned back around above the 0.78 level. That area is an area that has caused support in the past, and is now starting to show itself to be somewhat resistive. When we look at this chart, it’s not a huge surprise to see that the market may be turning back around as we have been in a downtrend for quite some time. Over the last couple of months though, we have slowed down and it appears of the market is trying to catch its breath after a massive selloff. The question then now becomes whether or not the Royal Bank of New Zealand gets its wish, which is a much lower valued Kiwi dollar.
In fact, the Royal Bank of New Zealand was quoted recently is saying that they believe this pair should be valued at the 0.68, which should send the sellers into this market again and again. Typically, in this particular pair the central bank can get what it wants as the liquidity is a bit of an issue in this pair. As far as major pairs go, this is by far the least liquid.
Selling rallies, picking up value in the US dollar
I’m selling rallies every time I see one in this market, as I look at it as value in the US dollar. After all, the commodity markets are absolutely horrible right now and the New Zealand dollar is heavily influenced by them. With that, this pair should continue to go much lower and ultimately break down significantly. I don’t really see a scenario in which a willing to buy this pair but I do recognize that a move above the 0.80 level would in fact be very significant for the buyers.
Above there, we could go to the 0.84 level relatively quickly as it would be a bit of a shock to the system. However, I suspect that if that does in fact happen, the central bank out of Wellington will have something to say about it.
