The New Zealand dollar rallied a bit in the early part of the Wednesday session, as we are continuing to watch 8interest rates in America and beyond.
NZDUSD
The New Zealand dollar has been slightly positive during the trading session on Wednesday as we are just above the crucial 0.59 level. The 0.59 level is a large round psychologically significant figure that a lot of people will be paying attention to as it has been both support and resistance multiple times in the past.
The market will continue to pay close attention to interest rates and how they are behaving, with the US yield dropping a bit that has given the New Zealand dollar a little bit more momentum. There are a lot of questions to ask about the Middle East and where the peace process is at the moment, and it certainly looks like the Americans, and the Iranians are at least trying to make something good happen.
If that ends up being the case and they do in fact manage to find some type of longer-term peace, then we have a real shot at risk appetite increasing, and that in and of itself will be a major driver of the New Zealand dollar.
Technical Support and Risk Outlook
That being said, in the short term we are a bit overbought, and a little bit of a pullback probably wouldn't be a huge surprise. I would look at the 50-day EMA as a potential support level for this market and the market participants will probably look at that as well as it is a common place to get involved in the market.
If we were to break down below there, then the 0.58 level could be targeted after that; you could be looking at the 0.57 level, and in that environment I think you would see a lot of struggle with risk in general with the New Zealand dollar losing against the US dollar but quite frankly I think most things would lose against the US dollar in that environment. I also suspect that you probably would see stocks fall as well as most other risk-related things, gold and silver etc.