The New Zealand dollar has fallen on Wednesday, as we continue to see a bit of consolidation. This is a market that is trying to figure out where to go next at this point.
NZD/USD
The New Zealand dollar has fallen pretty significantly during the trading session but still finds itself hanging around the crucial 0.60 level. This is an area that I think will continue to be important but if we do break down from here it's very likely that we will drop towards the 50-day EMA possibly even the 200-day EMA near the 0.5850 level.
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To the upside I see plenty of resistance at the 0.61 level so even if we do rally, I think it is somewhat limited. Quite frankly the New Zealand dollar is going to remain a little bit weaker than most other currencies against the US dollar from what I can tell as the Reserve Bank of New Zealand is likely to have to cut rates sooner rather than later at least that's the consensus.
Interest Rate Dynamics and Key Resistance
All things being equal, this is a situation where I think you have a market that is just trying to sort out where to go next. The recent sell-off of the US dollar certainly has had its part to play with the New Zealand dollar rising probably more so than anything in New Zealand itself.
A break above the 0.61 level really opens up a potentially big move to the 0.6350 level but we'll see whether or not that can happen. Right now, the interest rates favor ever so slightly the US dollar so keep that in mind, but we had also recently seen the bullish golden cross so a lot of mixed signals here but it certainly looks like it's struggling in this general vicinity.
Potential signal: I am a seller of the NZD/USD pair if we break below 0.5980 level with a stop loss at 0.6025 and a target of 0.5825