The NZD/USD is trading near the 0.56000 level as of this writing with rather quick price action on display. In the early hours of this morning the NZD/USD currency pair touched a low of nearly 0.55636 momentarily. The words ‘multi-year lows’ are being seen a lot in Forex and the NZD/USD has not escaped this usage as it has stumbled to depths not seen since the worst of the coronavirus economic fears in 2020.
Unfortunately a Vaccine to Cure Inflation may be Equally Tough to Work
New Zealand is suffering from inflation and high import costs, and next week’s Reserve Bank of New Zealand’s Official Cash Rate policy announcements may not be enough to stem nervous behavioral sentiment in the NZD/USD. Speculators insisting on being contrarian while looking for reversals upward likely have found the path to success difficult. The bearish trend of the NZD/USD has been strong and harsh.
Certainly the NZD/USD does produce movement higher, but because of the heightened amount of nervousness in the global financial sphere, upward trajectories have been hard to sustain. Traders should keep their eyes on the very nearby resistance ratio of 0.56000 which is being flirted with now, if a move above this mark is not able to be maintained there may be more room to move lower for the NZD/USD.
This Morning’s Lows may not be the Deepest Depths yet to be seen
Traders need to use solid risk management and remain conservative. However, speculators considering pursuit of the bearish trend in the NZD/USD cannot be faulted. One day, yes, the NZD/USD will begin to climb again in value, but economic difficulties globally are not about to be solved overnight. The path of the NZD/USD via technical charts does highlight lower depths have been demonstrated in the Forex pair before. In March of 2020 the NZD/USD did touch the 0.54750 vicinity.
- If support near the 0.55950 begins to be touched again, traders may want to target the 0.55900 to 0.55875 junctures as goals.
- The Reserve Bank of New Zealand’s monetary policy announcement is not until next week, which leaves the door open to nervousness about the downward trajectory to grow, unless the central bank was to suddenly intervene.
Traders should use conservative amounts of leverage with the NZD/USD because of its dynamic nature. Chasing more downward movement from the NZD/USD appears to be the logical bet. Why wager against the long term trend when there seems to be little in the way of evidence that sustained price action is suddenly about to change direction. Seeking lower depths by using take profit orders which cash out potential winnings remains the flavor of the day in the NZD/USD.
NZD/USD Short Term Outlook:
Current Resistance: 0.56195
Current Support: 0.55845
High Target: 0.56410
Low Target: 0.55590
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