The New Zealand dollar was negative on Friday, as traders are starting to price in the geopolitical risks, and the potential for a RBNZ rate cut later this year.
NZD/USD
The New Zealand dollar has had a negative session here on Friday, which makes a certain amount of sense because we had basically just shot straight up in the air for the last several sessions. So a little bit of a pushback I think would make a certain amount of sense.
That being said, the 0.61 level seems to be a bit of a barrier and the 0.60 level below is a potential support level. It is the 0.60 level that I am watching very closely because if we were to break down below that level, then I think it opens up a deeper drop perhaps down to the 0.5850 level where the 200-day EMA currently resides.
Central Bank Policy and Market Momentum
The 50-day EMA is trying to break above there and kick off the so-called golden cross. All things being equal, this is a pair that moves on risk appetite, and it should be noted that the New Zealand dollar is not the Australian dollar, meaning that although they tend to move in the same direction, the Reserve Bank of Australia is looking to hike rates meanwhile New Zealand they're talking about maybe cutting them.
So, I think it has less in the way of momentum longer-term. This so far has been about the US dollar, but if the US dollar stabilizes, I suspect the New Zealand dollar is the first place where you start to see cracks in all of the majors. If we break above the 0.61 level, that could open up a move to 0.6250, but right now it looks like at the very least we're going to see some sideways action.
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