- The New Zealand dollar has been all over the place during the trading session on Wednesday.
- As we continue to look at this market through the prism of risk appetite, keep in mind that the 0.5950 level underneath has been massive support for three days in a row.
- So, it does suggest that perhaps we are getting close to the bottom here. This of course, assumes a lot of things. And I think the bottom might only be short-term lived.
If we do rally from here, and we already did during the trading session on Wednesday, it's likely that we would see selling opportunities at higher levels. The 0.6050 level above will continue to be an area that a lot of people pay close attention to as it previously has been both support and resistance.
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Furthermore, the 50-day EMA is rolling over and preparing to break below the 200-day EMA, forming the so-called death cross. Whether or not this will have a significant impact remains to be seen. It's important to note that the New Zealand dollar is highly sensitive to commodity markets, particularly soft commodities like food. If we break below the 0.5950 level, it's likely we could head down to the 0.5850 level, where a massive double bottom has formed. With rising interest rates in the United States over the long term, it makes sense that the US dollar may continue to strengthen.
We are Oversold at the Moment
That being said, we are a little oversold, so I look for a bounce, but that bounce, at least from what I can see, will more likely than not be a selling opportunity. Furthermore, we have the jobs number on Friday, and that of course is something that could have a major influence on what happens with the US dollar, and in this case, what happens with the US dollar against the smaller commodity currency, the New Zealand dollar.
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