By: Mike Kulej
The New Zealand Dollar is one of the currencies heavily affected by the Euro crisis. Just like the other commodity dollars, it is regarded as “risky” in current environment. It has sold off about 500 pips against the US Dollar in just one week.
That firmly established this pair in a bearish trend. If there were any doubts, they were dispelled two days ago, when the price dropped under the most recent low on a daily chart. With both the lows and the highs getting lower, the downtrend is confirmed. Other technical tools also confirm this market direction.
The ADX Index is showing a strong trend, with reading that is high, but not excessively so. Since the current market down swing can be seen as large for this currency pair, some price run up is likely and maybe even expected. However, until the bearish trend is reversed, any rally should be used as a selling opportunity. Another leg down could, over time, take NZD-USD to 0.6200 level, a good size price swing for this pair.
NZD-USD in a Strong Downtrend
DailyForex.com