In the short term, this currency pair looks very sick. Ultimately, it looks likely to attract sellers anytime it tried to rally. There are no scenarios where I am a buyer of this pair.
NZD/USD
The New Zealand dollar has fallen right out of bed during the trading session on Friday as we continue to see the kiwi dollar suffer. This does make a certain amount of sense considering that the geopolitical issues continue to have people running to the US dollar for safety, especially with interest rates in America rising. At the same time, we have the kiwi dollar with its central bank behind it that looks pretty dovish, continues to see a lot of reasons to think that the kiwi drops.
New Zealand is a commodity currency obviously, but it's more soft commodities. It's not the type of commodities that are spiking at the moment. So, the question then becomes, what does New Zealand offer? And as far as an interest rate differential at the moment, not much. After inflationary numbers and the job market resilience in the United States, we continue to see the US dollar pick up a bit of strength and that's playing out here on this chart.
Technical Analysis of NZD/USD
I do think that ultimately, we will drop a bit further, maybe down to the 0.5750 level, maybe 0.57. And at that point in time, we may see a bit of an attempt to turn things around, but in the short term, this looks like a market that's got nowhere to go but lower. Rallies, I believe, offer selling opportunities, especially after the last 2 days, which have been absolutely brutal on the kiwi dollar. This is a market that you're looking for value in the US dollar, not the New Zealand dollar, so therefore you fade signs of exhaustion after short-term bounces.