The NZD/USD pair has been pretty bullish for both the month of February and the month of March. Going into the second quarter of the year, I believe that the market will make a serious attempt to break out. The biggest issue that we have at the moment is that above the 0.8650 level, there is a very “thick zone” of resistance. Ultimately though, I still think this market goes to the 0.90 handle. The biggest question of course is whether or not it can happen during the second quarter?
On the other hand, as you can see on the chart I have drawn a trend line that has been offering support. Granted, it doesn’t look like much, but at the end of the day it has been in place for a couple of years now. The New Zealand dollar has done fairly well, considering that it is now worth twice as much (roughly) as it was in the depths of the financial crisis. It seems odd to think about this, but there was a time where the NZD was only worth $0.48 as the world ran from risk.
Commodity markets could be the key, but keep in mind that Asia matters too.
Commodity markets could of course be the key for a higher New Zealand dollar, but at the end of the day the Kiwi dollar tends to be more of a barometer of commodity attitude than anything else. After all, the New Zealand dollar represents an economy that exports a lot of agricultural goods to Asia. Hours, as the Asians go, so go the Kiwis.
Going forward, I would expect pullbacks to be buying opportunities, and I really don’t think that this market can break down too much. That being said, expect dips that could last several days of the time. Remember though, we have a general uptrend, and that of course will work in your favor as long as you pay attention to it. The easiest way to trade currency pair is to find one that is trending, and then simply trade in that direction. In other words, I have no interest in shorting this pair at all during the second quarter this year, and fully anticipate seeing this market break out to the upside just a bit more by the time we’re done.
