The New Zealand dollar rose again on Thursday, as traders are jumping into more risk assets after the announcement of a ceasefire in the Middle East.
However, we are approaching a major resistance region.
The New Zealand dollar has rallied again during the trading session here on Thursday as we continue to see a lot of risk appetite being reintroduced into the market after the proposed ceasefire has captured the attention of traders worldwide. Ultimately, I think this is a market that could reach the 0.59 level if this can continue, but it is probably worth noting that we are getting fairly close to an area of significant resistance.
Furthermore, we do have to worry about the weekend and what that could bring with the conversation between the Iranians and the Americans coming, it could lead to a lot of volatility. If there is further uncertainty, that could of course work against everything that we've seen here and signs of exhaustion, I believe, would be a nice selling opportunity assuming that it even occurs.
Market Inflection and Momentum
If we can break above the 0.59 level, then I think the New Zealand dollar probably takes off for a much bigger move. This is an area of major inflection and therefore we need to be very cautious, but we also need to recognize that the momentum definitely seeming to accelerate later in the day on Thursday and that in and of itself could be an important piece of the puzzle to pay attention to.
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If we were to turn around and break down below the 0.58 level, I think that would be a very negative turn of events for the New Zealand dollar and probably have the US dollar strengthening across the board. This would also entail more risk appetite by traders, as seen not only here, but in various assets classes as well.
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