The New Zealand dollar fell on Tuesday, only to turn back around and show signs of strength again.
NZD/USD
The New Zealand dollar did fall quite a bit during the early hours on Tuesday as the 0.60 level has offered support. The market turning around and bouncing the way it has will end up forming a bit of a hammer, which is fine, but it is also predicated by several shooting stars.
With all that being said, this is a market that I think is hanging around the 0.6050 level, which is the midpoint of the consolidation area that I think we are trying to stay in. The 0.60 level is a floor, the 0.61 level above is a ceiling.
Ultimately, if we were to turn around and break down below the 0.60 level, it opens up the possibility of a move down to the 0.5950 level. The 0.61 level is likely to end up being a bit of a ceiling and breaking above there I think would have a lot of people jumping into the market.
Central Bank Policy and Volatility
Ultimately, this is a situation where you will continue to see a lot of volatility. With that being said, the market I think remains a short-term trading type of opportunity. The noise here I think continues to be a major concern and keep in mind that unlike Australia, New Zealand has a central bank that is probably going to cut.
Top Regulated Brokers
That makes the Kiwi dollar a little bit more susceptible to trouble. The US dollar falling apart though could send the New Zealand dollar higher, but right now it looks like we are still trying to find some type of external factor to really get going.
The PCE inflationary numbers come out at the end of the week and that could have a major influence on what happens with the dollar ahead. So, with that, I think we have a situation where short-term traders will continue to use sideways and consolidation trading, and therefore I think we have a scenario where if you are a day trader, this might be your favorite pair.
Ready to trade our Forex daily analysis and predictions? Check out the best forex brokers in New Zealand worth using.