The NZD/USD fell to values not seen since the first week of August as financial institutions remain absolutely locked within cautious trading modes.
- The NZD/USD touched the 0.59500 vicinity in early trading this morning.
- The lower value tested levels not seen since the first week of August. Support ratios may have caused some buying upwards afterwards via a reversal to a current price of nearly 0.59700, but the NZD/USD remains locked in fragile trading environment.
- But before traders give up completely on the New Zealand Dollar, they need to understand global Forex is also dealing with USD centric strength across the board.
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The NZD/USD may look oversold to bullish traders and certainly reversals will continue to be seen, but until several doses of positive impetus are delivered steadily the currency pair may remain within the lower boundaries of its mid-term range. A series of risk events will begin today from the U.S, and again it needs to be stressed the NZD/USD is moving based on USD centric sentiment.
U.S Economic Data is Start of Volatility Parade for NZD/USD
Day traders who do not have much experience need to be extremely careful if they decide to pursue the NZD/USD over the next week. I am not trying to create clickbait and sound sirens mindlessly. The NZD/USD is likely to see a sea of volatility develop and the tidal forces of price velocity will potentially be fast and big.
As the NZD/USD trades near lows, yes, it has achieved a reversal upwards in the past hour and a half, the currency pair still needs to be considered dangerous and support levels have consistently proven vulnerable over the past few weeks. Today’s Advance GDP reports from the U.S will throw some fuel on the Forex fire later, tomorrow’s inflation data will cause a reaction, and then there are the Non-Farm Employment Change statistics this Friday. The near-term parade of fireworks may not be rock concert loud, but it will be a good beginning for the volatility show.
NZD/USD and U.S Election Reaction
Next week’s U.S election, and the Fed following two days later with their interest rate decision, will be enough to cause violent moves in the NZD/USD. Financial institutions are clearly leaning into risk adverse positions globally and buying the USD. The question is how long will this last. Risk management is a must over the next handful of trading days in the NZD/USD.
The currency pair is always capable of price velocity and the risk events on the schedule merit an extra dose of caution.
While the NZD/USD currency pair may look oversold to many traders, those hoping to time a large sustained move higher may have to wait until late next week.
Choppy trading is expected in the NZD/USD short-term, and nervous sentiment will rule the coming days.
NZD/USD Short Term Outlook:
Current Resistance: 0.59780
Current Support: 0.59650
High Target: 0.59930
Low Target: 0.59475
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