The New Zealand dollar continues to be one of the worst performers in the G10.
NZD/USD
The New Zealand dollar continues to struggle as we are falling yet again during the trading session on Wednesday for the 6th day in a row. It looks like the bottom has completely fallen out, and the New Zealand dollar is clearly trying to get to the 0.56 level as there's just no bounce here.
Even if we do get a little bit of a bounce from here, I think we have a certain amount of resistance near the 0.57 level, an area that previously had been support should now be resistance now. This is despite the fact that the interest rates in the United States have fallen.
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This shows you just how much of a differentiation between the United States and everything else there is, and it looks to me like the US dollar shortage continues to be a major issue. Furthermore, you have to ask questions about where the global economy is going, because generally speaking, if the US dollar strengthens, that does a lot of bad things to other places.
When I look at this chart, a move below the 0.56 level is possible, but we are a bit overextended, so I think I'm waiting to fade short-term rallies that show signs of exhaustion. If you're not already shorting the Kiwi dollar, it's difficult to suddenly do it here, but a little bit of value for the US dollar, meaning a bounce, could attract fresh new sellers.
Ultimately, I like this as a potential breakdown towards the 0.55 level before it's all said and done. I just think we're a little overdone in the short term. As far as buying is concerned, I have no interest in doing so. I would need to see the US dollar really struggle against most currencies to even begin to look at the New Zealand dollar.
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