As of this writing the NZD/USD is trading near the 0.62260 mark, which is actually a successful reversal higher above the lower values seen before going into the weekend. A ratio of nearly 0.61465 was seen on Friday, which tested values challenged in May of 2020. However, the NZD/USD has also been within the grasp of a rather steady and incremental bearish trend when looking at long term charts. A high of approximately 0.74765 was touched momentarily in February of 2021.
Technical traders would be right to say the direction of the NZD/USD hasn’t been a simple speculative road to take advantage. While the price action has been downwards, it has been achieved with a fairly steady diet of choppy conditions. This underscores the necessity of making sure risk taking tactics when pursuing the NZD/USD are locked into place. And the rather choppy conditions as long term lows are being touched also raise the question about if and when the weak New Zealand dollar will begin to establish a real change of direction.
The adage the trend is your friend in Forex is apt and often true. The USD has proven a powerful source of energy the past eight months against many of the major currencies as it has generated buying because of the steady rise of interest rates from the U.S Federal Reserve. Traders may be asking if additional hikes from the U.S central bank have already been digested into the NZD/USD.
While the NZD/USD has gained some momentum today from short term reversals higher, it should also be remembered that U.S is on a full banking holiday today because of Independence Day celebrations. The move higher this morning may not be facing as much resistance as usual because of the lack of U.S financial institutions being involved within Forex today.
If the lack of institutional trading proves to be the case, traders may have a chance to speculate on potential reversals lower developing again. If the NZD/USD reaches technical resistance seen on the 29th and 30th of June near the 0.62540 vicinity it may prove to be an interesting place to ignite selling wagers for those who believe downside price action is not finished.
Near term the NZD/USD should be monitored and treated carefully because of a lack of volume, which may be occurring due to the absence of the Americans. Upon their return tomorrow, Tuesday could prove to be rather volatile and speculators are urged to make sure risk management is in place. While higher levels may be demonstrated short term, tomorrow’s price action and Wednesday’s will deliver real clues about existing sentiment.
NZD/USD Short-Term Outlook
Current Resistance: 0.62350
Current Support: 0.62003
High Target: 0.62609
Low Target: 0.61459
