The NZD/USD has eroded to long-term lows as global uncertainty continues to produce volatility and Forex has seen brutal tests, this as the currency pair trades near the 0.55590 ratio for the moment.
The NZD/USD is trading quickly and with a wide spread as indecision and volatility have produced volatility in the currency pair and the broad Forex market. The decision of the Reserve Bank of New Zealand this morning to cut the Official Cash Rate by a quarter of a point to the 3.50% mark and proclaim additional cuts may be seen in the coming months is an indication uncertainty is ruling the marketplace. The current ratio of the NZD/USD is near 0.55590, but must be checked as this article is being read.
Essentially at this time last week, financial institutions were producing optimism as they waited for the U.S tariff pronouncement. The NZD/USD touched the 0.58500 ratio in early trading on Thursday. However, Forex trends have taken a beaten in recent days as outlook is being debated and acted upon by competing financial institutions. For the moment, traders should expect wide spreads via bids and asks, which is an indication banks are looking for a safe middle ground so they do not get eaten alive via their commercial forward rates.
Near-Term NZD/USD Speculation and Concerns
Any trader considering the temptation of pursuing the NZD/USD in the short-term needs to understand volatility awaits. The lower range of the currency pair has been bouncing against support the past couple of days, but choppy whipsaw movements should be anticipated. The tariff rhetoric from the U.S White House and China is escalating, not decreasing.
Traders who believe the NZD/USD is oversold could prove correct in the mid-term, but betting on this outcome in the short-term as a sea of concerns hit financial institutions is dangerous. The NZD/USD is traversing lows seen in October of 2022, momentarily in March of 2020, and the spring of 2009. In other words prices being seen now are from the days of coronavirus and the aftermath of the financial crisis in 2008.
Attempting to Trade the NZD/USD Short-Term
The broad markets need to see calm reappear. Financial institutions are waiting on positive impetus. Unfortunately tranquil words are in short supply. Equity indices are struggling early today and they do not promise to improve when the U.S session begins in a handful of hours.
- Until the broad markets produce some positive momentum, the NZD/USD could face difficult tests.
- Yes, in the short-term the currency pair looks oversold, but looking for upside should be done with quick hitting bets and extremely conservative leverage.
- The markets are trading in what may turn out to be historically noteworthy times, meaning Forex markets could produce more surprising results in either direction.
NZD/USD Short Term Outlook:
Current Resistance: 0.55650
Current Support: 0.55790
High Target: 0.55500
Low Target: 0.55350
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