The New Zealand Dollar remains noisy at this point, and perhaps is a little overbought.
NZD/USD
The New Zealand Dollar has been choppy during the trading session on Thursday, hanging around the 200-day EMA. The 200-day EMA is an indicator that a lot of people pay close attention to, and it is an area where I think a lot of people will be trying to determine whether or not there is a trend to be had. After all, the 200-day EMA is the most widely used long-term trend-defining moving average.
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That being said, it's been flat for ages in this pair, and that just solidifies the idea of the New Zealand Dollar being in a sideways trend for the last couple of years. We are essentially in the middle of it and are a little overextended at this point. So, I'll be watching interest rates in both the United States and New Zealand to determine where we go next.
Interest Rate Drivers and Technical Target Analysis
I think, ultimately, the interest rates in America will probably be the biggest driver. And despite the fact that the Reserve Bank of New Zealand has taken on a little bit more of a hawkish tone, it would only take some inflationary numbers out of the United States to turn things around. With that being said, the reality is that the recent inflation numbers out of America have been lower than anticipated, and that could continue to drive the Kiwi dollar higher. In fact, that is part of what got it here.
But I also recognize that a reversion to the mean is a real thing, and it's possible that we continue to see this as a market that will eventually give us a shorting opportunity. If we can break above the 0.5875 level, then it's likely that we will go to the 0.5950 level. If we fall from here, then the 0.58 level is a first target. After that, we could open up a much deeper.
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