- The New Zealand dollar traded erratically on Tuesday as it tested support near 0.56, with strong resistance expected around 0.57.
- Broader weakness persists, keeping the pair positioned as a sell-the-rally market unless the US dollar collapses.
The New Zealand dollar has been all over the place during the trading session on Tuesday, as we continue to see the 0.56 level offer a little bit of noise for market participants to focus on. It has been somewhat supported, and it'll be interesting to see if that ends up being the case. All things being equal, the market bouncing from here does make a certain amount of sense, but I think there's a lot of resistance above in the form of the 0.57 level, which is an area that I expect to see a confluence of previous support and future resistance right along with the 50-day EMA, keeping the New Zealand dollar somewhat tame.
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On a Move Lower…
If we break down from here, the 0.55 level is an area that I think is a hard floor in this market and a major area of demand. So, we'll see if that holds up, but the New Zealand dollar has been one of the weakest performers against the greenback over the last several months. So, unless the greenback absolutely collapses at this point, I just don't see how the New Zealand dollar is anything other than a “sell the rally” type of situation. This would be especially true if we end up having more of a “risk off” type of environment out there, which could actually happen.
With that being the case, this is a market that I think continues to be very noisy, but if you're patient, you should have a nice opportunity to buy the US dollar at a better price at higher levels in this pair.
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