The New Zealand dollar has fallen during early trading on Thursday as we are now well below the 0.58 level.
This is a market that will continue to pay close attention to risk appetite and, of course, the fact that New Zealand is so sensitive to energy flows coming out of the Strait of Hormuz.
New Zealand, as well as other Asian region countries, has a major problem with energy supply as long as the situation in the Strait of Hormuz remains closed or at least disputed. With this, I think we have to believe that eventually traders will have to make a bigger decision, and it is probably worth noting that a lot of people will be watching whether or not risk appetite returns.
The US dollar, of course, is considered to be a major safety currency, while the New Zealand dollar is typically used to put more risk on in your portfolio. New Zealand is highly exposed to Asia in general, so if Asia struggles, then New Zealand struggles.
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Key Technical Levels and Market Outlook
Rallies at this point in time look like selling opportunities to me, with the 0.5850 level being a potential area of resistance, especially now that the 200-day EMA sits right there. To the downside, the 0.50 level makes a sensible target; it is an area that's been important a couple of times in the past, and I do think that you will continue to see a lot of traders watch that as a potential target and possibly even a support level if we do, in fact, bounce.
I don't have any interest in getting too cute here in the NZD/USD pair; I want to follow whatever trend we have. Now that it looks like we are breaking below a major support level for the last couple of months, I suspect that we will be looking at this as a market that is more likely than not going to remain a major move and possibly even break down below the 0.57 level. If it does, the bottom could fall out.
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