The NZD/USD pair fell during the session on Thursday, as you can see clearing the 0.85 handle significantly during the trading session. However, by the end of the session we had bounced enough to form a hammer at what was once significant resistance. This is interesting to me, as it looks like the market is trying to break back down to the upside again.
This market had recently seen a significant break higher, a pullback, and then a break higher again with a lower high. That of course is a very bearish sign, but it looks like there is still a significant fight in this pair at current levels. If that's the case, we could see a move much higher before it's all said and done.
A while back, based upon the breakout of the 1000 pip tall consolidation rectangle that the market had escaped, I had anticipated this marketplace going to the 0.95 level. While this is still certainly possible, it does seem a bit far-fetched at this point. However, it should be noted that is exactly what the technical signals told me. With that being the case, I think that will happen eventually. However, expect a lot of choppiness between here and there.
This will certainly be helped along by the Federal Reserve and its possible expansion of quantitative easing now. It's hard to imagine that they were going to go ahead and do it, but it appears that they are ready to do so if economic conditions warrant such a move. This was stated in their announcement on Wednesday, and as a result we could actually see ramped up asset purchases by the Federal Reserve. It should be stated that they also suggested that they could lower the amount of asset purchases that they are doing every month also, but the fact that they suggested that they could increase it is the first time in a while we've heard even the slightest hint of possible easing coming forward. With the Federal Reserve looking to devalue the Dollar over time, that is where I believe we can make an argument for the 0.95 handle.