The New Zealand dollar initially was very volatile during the trading session on Thursday but then fell to reach towards the 0.6925 handle. I think that there is more significant support a bit lower, perhaps at the 0.69 handle, and a breakdown below there would be a very negative sign. I think at that point, the New Zealand dollar goes looking towards the 0.68 level below, which is significant support on longer-term charts going back several months. I suspect that the sellers will eventually return, because quite frankly the US dollar, although soft over the last couple of sessions, will more than likely continue to attract attention as the interest rate situation in America looks much more positive than many other countries around the world. Also, the New Zealand dollar is highly leveraged to commodities, so keep in mind that if commodities roll over, it can be because of the stronger US dollar, so that gives us at least a couple of reasons to be short of this market.
If we were to rally from here, there is a massive amount of resistance at the 0.70 level, which is psychologically important. In fact, that number is very important going back decades, so I think that even if we were to break out to the upside, we should at least get a couple of more legs lower, as they would be looking to build up momentum. I suspect that we aren’t too far from some type a roll over and stock markets and commodities, so I think that the New Zealand dollar will probably continue to soften a bit. Perhaps the recent selloff had been a bit overdone, but overall, I think it’s the right direction for the in term. If we break above the 0.70 though, that would be extraordinarily bullish and probably send this market looking towards the 0.72 handle again.
NZD/USD Video 10.11.17
This article was originally posted on FX Empire
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