The NZD/USD pair fell hard during the session on Wednesday, proving the 0.85 level would be overly resistive as one would expect. However, there was a little bit of a bounce from the 0.84 area, and as a result this should give the market a big enough support area in order to make another attempt at the 0.85 handle, an area that I think we can get above on a daily close could lead to a much larger move higher. That being the case, the market could head towards 0.90, which is the next large psychologically significant number.
Going forward, I think that this market will make that attempt, simply because of the Federal Reserve and the fact that it cannot taper off of quantitative easing with the employment numbers in America being as weak as they are. As long as that's the case, the US dollar will more than likely be on the back foot, and as a result anything that has the USD in it should continue to favor the other currency.
Commodity currency
Don't forget that the New Zealand dollar is a commodity currency. Because of this, it does react to the overall attitude of commodities in general, and with that being the case, I feel that this market could continue much higher, but we do need to get above the 0.85 level on a daily close. A break of the most recent high that was made on Tuesday would do the trick, and would have me buying this pair.
While the New Zealand dollar isn't necessarily attached to gold and some of the harder commodities that tend to do well in a weak US dollar environment, it will move with the general attitude of the Australian dollar, which is seeing a bit of a resurgence at the moment. Because of this, I do feel that this market goes higher and cannot short it. In fact I believe that there is a ton of support all the way down to the 0.82 handle, and will be looking for supportive candles all the way down there even if we do pullback.
