The New Zealand dollar spent most of Monday trying to turn things around. We have been in the process of building a floor here, but haven’t seen the necessary momentum to really turn things around.
NZD/USD
The New Zealand dollar spent most of the day trying to rally against the US dollar, much as we've seen over the last couple of trading sessions. Ultimately, though, this is a market that is a little oversold, so a bounce makes a certain amount of sense, but I also think that bounce is probably somewhat short-lived.
The New Zealand dollar will continue to move with risk appetite and perhaps the idea of the global supply chain, whether it is strengthening or weakening. And this is a market that, quite frankly, I'm looking to short as soon as I get the opportunity.
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If we bounce toward the 0.57 level, I think that opens up a potential shorting opportunity. If we were to break above there, then the 0.58 level could be an area that we could start shorting also.
Market Catalyst and Support Levels
Below the current trading, we have the 0.56 level coming into the picture to offer support. Anything below there really starts to send the selling pressure lower.
Ultimately, I think this is a market that you're looking to fade short-term rallies, probably for small and short-term moves, because we are just bouncing around trying to figure out the next move and what the next catalyst may or may not be.
I do not like getting aggressive here, at least not at the moment. I do think that there's a high possibility that we could bounce, and that bounce could be somewhat quick, but I also think it will have no real momentum behind it as far as the longer-term trade. I continue to favor the US dollar over most currencies, including the New Zealand dollar.
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