- I'm not calling for the New Zealand dollar to implode from here and start falling drastically, but I do think that short-term choppiness will offer plenty of opportunity for range-bound traders.
- The New Zealand dollar has been very strong during the trading session here on Monday as the US dollar is on its back foot against most things.
- That being said, I don't know that this changes much quite yet, and I think you are probably going to see a lot of back and forth as we are hanging around the 0.58 level, an area that's been important more than once.
Furthermore, we are stuck between the 50-day EMA and the 200-day EMA indicators, which quite often will cause a bit of a squeeze. Ultimately, I think the other thing that's most certainly a major issue here is the fact that we have a lack of volume this time of year, as most traders are focusing on getting out of the market and into the holiday spirit.
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Long-term Fed Policy Considerations
So with that, I am somewhat neutral here. Longer term, I think this is going to be an interesting pair to watch because a lot of traders are betting that the Federal Reserve is going to loosen monetary policy quicker than the Federal Reserve thinks it's going to, but this is a game that we've played more than once and the market typically loses.
The Federal Reserve is steadfast in its desire not to reignite inflation, and therefore, I still look at this as a market that you might fade on signs of exhaustion. If we can break above the 0.5850 level, then fine, we probably go another 150 pips to the upside. I'm not calling for the New Zealand dollar to implode from here and start falling drastically, but I do think that short-term choppiness will offer plenty of opportunity for range-bound traders. I just favor the downside, at least for the moment.
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