Potential signal:
- I am a seller of the NZD/USD pair near 0.6025 with a stop at 0.61 and a target of 0.5860
The New Zealand dollar has been banking forth for most of the day on Tuesday as we are trying to sort out where we are going next. The 50-day EMA sits just above, and the 200-day EMA sits just below. Ultimately, this is a market that I think continues to see a lot of noisy behavior, but I also recognize that you need to recognize that the pair is highly sensitive to risk appetite and risk appetite is a bit of a moving target at the moment.
After all, there are dreams of the Federal Reserve cutting rates three times between now and the end of the year.
RBNZ Not Tight at the Moment
But there’s also the situation where New Zealand isn’t exactly going to tighten its monetary policy soon. So, the straight differential, we’ll see where that ends up. But right now, it looks like the Federal Reserve is probably going to continue to be the main focus for traders in general. And because of this, I think you have to wonder whether or not we can really get any momentum.
As things stand right now, I look at the 0.5850 level as a potential support level and the 0.61 level as a potential resistance barrier. We do continue to see a lot of chop and as we are closer to the bottom, we’ll see if we bounce. It might be worth buying, but right now I think the market is likely to continue to see a lot of back and forth kinds of short-term trading. But if we can finally break above the 50 day EMA, maybe we have a bigger move to the 0.6025 level as an example. I do recognize this as a market that continues to be very noisy, but ultimately this is a market that I think will right now at least continue to consolidate.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.