- The New Zealand dollar initially did try to rally during the trading session on Monday but gave back gains near the 0.61 level.
- The 200 day EMA is an indicator that a lot of people will pay attention to, and it sits just above there.
- As I record this video, we are at the lows of the day, and it looks like we are trying to break down.
If we do break down from here, I suspect we have a situation where the New Zealand dollar drops down to the 0.60 level. The 0.60 level, of course, is a large round psychologically significant figure and an area where a lot of people would be paying close attention. There are, I would assume at least, a lot of options barriers in that general vicinity. And I think ultimately, we have to look at this through the prism of the market trying to find its floor.
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If We Drop From Here
If we give up the 0.60 level to the downside, that would be very negative for the New Zealand dollar, and I anticipate in that scenario, you probably have the US dollar strengthening against almost everything. I have no interest whatsoever in trying to buy this pair at least, not until we break above the 200-day EMA, and at that point, then maybe you have a situation where the market could go looking to the 0.62 level.
The market will obviously move on risk appetite as it tends to do from time to time. And I think all things being equal. This is a market that is going to need a lot of help from other markets to get more risk appetite into this pair. The Reserve Bank of New Zealand recently cut interest rates by 50 basis points, shocking the market much like the Federal Reserve did. So, it took all of that boost right out of this pair for the Kiwi.
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