The New Zealand dollar has seen buying pressures again on Wednesday, as we are looking at the RBNZ and waiting to see if the hawkish tone continues.
NZD/USD
The New Zealand dollar has rallied again during the trading session on Wednesday as we are now peaking above the 200-day EMA just as we had done during the Tuesday session. The question at this point is whether or not we can continue to go higher. The area right above the 200-day EMA, I believe, is an area that shows a lot of selling pressure.
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That being said, if we can break above the 0.5860 level, it's possible that the New Zealand dollar could continue to go much higher, perhaps to the 0.5950 level. This is an area that a lot of people will be watching if we get there.
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Ultimately, though this is a market that is getting a little stretched, it is paying attention to the RBNZ and the fact that they could raise rates again. The Federal Reserve right now is still a bit of an open question, but rates are higher in America, so if you are buying here, you are swimming upstream a little bit during the trading of this pair.
I do think you're at an area of pretty significant inflection, so we could determine the next 200 pips in one direction or another from this area. All things being equal, this is a market that I think you need to watch very carefully here.
If we break down below the 0.58 level, then I would be very bearish on this market. If we break above the 0.5860 level, then maybe I will become bullish. I would like to see how the US dollar behaves against other currencies, not just this one, to make that move.
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