The New Zealand dollar fell to kick off the session, only to bounce back toward the crucial 200 day EMA.
New Zealand Dollar
The New Zealand dollar initially fell during the trading session on Tuesday, only to turn around and show signs of life. At this point it looks like the market is going to try to close with a hammer and that hammer sits just below the crucial 200-day EMA.
The 200-day EMA is a situation where a lot of traders will be paying attention to whether or not we can break above there, but I think the biggest thing to take away from here is that the Federal Reserve is likely to cause a lot of noise with its statement. Traders will be trying to parse whether or not the central bank is going to remain extraordinarily tight and sound very hesitant to cut rates. I think that is the case, and part of what we might be seeing here is a little bit of a knock-on effect from the Australians raising rates.
Shorting Opportunities and Overall Sentiment
Quite frankly, I don’t think that makes any difference nor does it make any sense at this point, and I am looking at this through the prism of being able to short this pair, perhaps closer to the 50-day EMA if we get some type of short-term spike. Signs of exhaustion I will jump all over as I don’t like the New Zealand dollar and the RBNZ actually is one of the more dovish central banks around the world.
I suspect that this is a situation that continues to be one that is fluid, but I also recognize that we are looking at the market as one that remains very noisy and very difficult to hang on to, but I think that’s true with most currency pairs. I still believe that there is a lot of overhead resistance and with that, I am looking for opportunities to the downside. I recognize that it probably won't present itself until after the Federal Reserve press conference.