The NZD/USD pair initially rallied towards the 0.72 level during the session on Tuesday, but found too much in the way of selling pressure in that area so turned back around to form something akin to a shooting star. Because of this I believe that this market is ready to drift lower again. In the meantime though, I think what we’re going to see is some type of consolidation between the 0.72 level and the 0.70 level. This makes sense of course, because to break down below a large, round, psychologically significant number like it 0.70, typically you need some type of momentum building exercise.
I think if we can break down below the 0.70 level, this pair breaks down significantly, probably heading down to the 0.65 handle. On the other hand, if we can break above the 0.72 level, I think that we will probably bounce to the 0.73 level where I expect even more resistance. In other words, I don’t really have an interest in owning the New Zealand dollar at the moment.
Looking for longer-term signals to buy
I have no interest in buying this pair until we get some type of longer-term signal. That could be a hammer on the weekly chart, or better yet, the monthly chart. I think this market continues to struggle just simply because commodities in general are doing that well. Remember, the New Zealand dollar tends to mimic what the general risk appetite of futures traders happens to be at the moment, and right now it’s not overly exciting. The precious metals markets are simply sitting still with a slightly negative bias, and the agricultural markets aren’t exactly on fire either. With that, I don’t see any reason why the New Zealand dollar would suddenly pick up massive amounts of steam.
However, keep in mind that there is an interest-rate decision today. With that, it is possible that the Royal Bank of New Zealand says or does something to shake the markets up.
