The New Zealand dollar initially rallied during the day on Wednesday, but found the 0.7750 level above to be a bit too resistive yet again, and pulled back to fall significantly. By the time the day was over, we had formed a shooting star which of course is a very bearish sign. I think that this market is going to continue to consolidate in this area and then break down, which goes with my longer-term thesis of the US dollar range supreme, while commodities and commodity currencies struggle. I believe that it is only a matter of time before we break down significantly, and perhaps head as low as the 0.7450 region. That area was supportive last time we approached it, and I don’t see anything to suggest that it won’t be this time.
Watch the commodity markets
I believe that we will have to continue to watch the commodity markets in general, as they seem to be very susceptible to noise and concern at the moment. With this, it is probably a much more secure bet to assume the commodities are going to struggle every time they rally. After all, there’s really nothing to suggest that economic conditions are getting better around the world at the moment. I don’t necessarily want to be a harbinger of doom, but I just think it were a bit stagnant and will continue to be for the foreseeable future. With that I will always be a bit suspect of commodity rallies.
I believe that the Australian dollar looking very soft at the same time isn’t some type of Gwent sedans, and that the US dollar should continue to climb. That of course will push this pair lower, and I do believe that ultimately the 0.7450 level below gets broken as well. It’s probably only a matter of time before we break down below there and head to the 0.72 handle in my estimation. I don’t really have a scenario in which I am willing to buy this pair.
