The New Zealand dollar continues to see a lot of noisy behavior during the trading session on Wednesday as we pressure a major support level against the U.S. dollar.
Right around the 0.5650 level, we have seen a bit of buying pressure a couple of times in the past, and that suggests that perhaps the markets are trying to determine whether or not we have more downward pressure or if we can finally bounce.
Interest rates in America are still highly elevated, and at the same time, you have both central banks going different paths. The RBNZ looks to be a little bit dovish, while the Federal Reserve is likely to be hawkish. That being said, the core PCE numbers came out during the trading session a little lower than anticipated in America, so it did give the New Zealand dollar a bit of a bump against the US dollar. However, we have already given that back, and it looks like the bond market is still speaking loudly that it wants higher rates.
Top Regulated Brokers
A breakdown from here opens up the possibility of a drop down to the 0.56 level
If that is going to be the case, it will continue to make the U.S. dollar more attractive. A breakdown from here opens up the possibility of a drop down to the 0.56 level. Anything underneath there opens up the possibility of a move to the 0.55 level.
Rallies at this point in time I still look at with suspicion, and although I think we are overdue for a bounce, I am not willing to buy it. What I am willing to do is short this market at the first sign of significant resistance, perhaps near the 0.57 level, maybe even 0.5750.
I think this is a market where you are still looking to fade the rallies, as New Zealand is especially exposed to the Strait of Hormuz being relatively closed and Asian economic concerns. On the other hand, the U.S. dollar is considered to be a safe-haven asset, and certainly at this point in time, a lot of traders are going to be looking for safety.
Ready to trade our daily Forex analysis? Here's a list of the brokers for forex trading in New Zealand to choose from.