NZD/USD Forecast: Kiwi Continues to Disintegrate

The market will continue to be a bit of a mess, but it’s clear as to which direction you should be trading.

  • The NZD/USD currency pair has fallen significantly during the trading session on Friday, as the market has been quite negative for some time.
  • This is a market that I believe eventually finds some type of bounce, but it’s very unlikely to last for a significant amount of time.
  • The US dollar is like a juggernaut against almost everything, and I just don’t see how that changes in this environment.

"Risk on” Type of Situation

However, it is probably worth noting that the markets never move in one direction forever, so unless you are already short of the New Zealand dollar, there’s probably not a lot to do until we get an opportunity to pick up “cheap US dollars.” The New Zealand dollar is highly levered to growth and more of a “risk on” type situation. This is a situation where we are closing toward the bottom of the candlestick, so I do think that it is probably only a matter of time before we see some type of bounce or attempt to recover. That might simply be a bit of short covering, as traders look to take profit. Nonetheless, this is a market that looks like it’s destined to go much further to the downside so now was not the time to be a hero.

The 0.60 level above is where I would assume there is a lot of resistance, and a break above that level would be a psychological victory for the bulls. That being said, it would take a lot to get there, and we also have the 50-Day EMA showing up in that same vicinity. I think anything close to that with a long way to the upside would be an excellent selling opportunity, assuming that we can even rally that much. The market will continue to be a bit of a mess, but it’s clear as to which direction you should be trading. The question is whether or not you want to jump in and chase it all the way down here? The answer of course is no, but that does not mean that it wouldn’t work out. Look for value in the greenback and take advantage of it, because that’s been the trade that has worked multiple times over the last several months. Commodity markets continue to take a punch to the face, as global growth continues to drop.

NZD/USD chart

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.