The NZD/USD has produced another leg lower today as long-term values not seen since early November of 2023 continue to be tested.
- Support levels are being challenged today in NZD/USD trading as another drop lower has been exhibited.
- As of this writing the currency pair is touching the 0.58870 ratio, which is not only testing ratios seen in the middle of April, but also in early November 2023.
- Behavioral sentiment across the global Forex landscape is nervous and ‘wicked’ results have been produced in many major currency pairs.
Traders of the NZD/USD are reacting to the stronger USD centric viewpoint which has become established and is causing choppy bearish conditions for the currency pair, but also knock on effects from turbulence in the Japanese Yen which is correlated to the New Zealand Dollar because of trade considerations between the two nations. Later today the U.S Federal Reserve will issue their FOMC Statement and there will be no change to the Federal Funds Rate. What financial institutions would like to see and hear is a clearer outlook from the U.S central bank regarding insights about the American economy. However, answers will be hard pressed to be anything more than hot air coming from the mouth of Fed Chairman Jerome Powell.
The U.S has an Inflation Problem and the NZD/USD is Suffering
U.S economic data continues to show consistently stubborn inflation and the Federal Reserve has been caught off guard. The NZD/USD may look oversold to many day traders, but financial institutions are bracing for the potential the Fed may not be able to cut interest rates which match their initial optimistic expectations. Late summer has been the spoken about the past couple of weeks, but if inflation data remains sticky the Fed may be lucky if they can cut interest rates in the late fall.
The 0.59000 level has been broken in the NZD/USD and if sustained trading persists below this level, it will be an indication bearish concerns weigh heavy on financial institutions who are considering their mid-term cash forward positions via commercial contracts with their corporate clients.
Long-Term Support and Technical Charts
If speculators who are accustomed to buying the NZD/USD sill want to pursue long positions they should be very careful. Quick hitting trades may prove to be the wise choice. The price range on the NZD/USD will become wide and fast before and after the FOMC Statement and Fed Press Conference later today. Traders without deep pockets and who do not have the stomach for volatility may want to sit on the sidelines and simply watch what transpires.
- Traders should also remember that on Friday, U.S jobs numbers will be published which will throw additional fuel into the fire for the NZD/USD.
- Support levels are testing long-term ratios because financial institutions are nervous and this may continue over the next couple of days.
- Traders should look at long-term technical charts to see the potential depths that could be tested if nervousness grows regarding the lack of potential for a U.S interest rate cut.
NZD/USD Short Term Outlook:
Current Resistance: 0.58965
Current Support: 0.58830
High Target: 0.59160
Low Target: 0.58490
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