The New Zealand dollar rose again on Thursday, as we continue to see a significant recovery play out here.
NZD/USD
The New Zealand dollar has been very strong during the trading session on Thursday as traders continue to look at interest rate markets for clues. The interest rates in New Zealand were raised, and now traders are betting that there's going to be more down the road after potential inflation hikes.
That being said, I think this is also a market that is setting up for a nice shorting opportunity if we get a bit of exhaustion or perhaps even further overextension. I'm looking at the 50-day EMA, which is just below the 0.58 level, an area that has been important multiple times and an area that, given enough time, I do think would attract a lot of attention.
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It's difficult to imagine a scenario where I would want to get overly aggressive to the upside, although I can see where traders might look to this as a potential buying opportunity in the short term. That would be the key for me, though, the phrase short-term.
I don't like the idea of getting too negative on the US dollar, as it has been very strong for quite some time, and of course, there are plenty of concerns out there that could cause a bit of a headache. Keep in mind the New Zealand dollar is pretty far out on the risk appetite spectrum, and if anything negative hits the wires, it normally struggles.
If we have a scenario where the US dollar picks up steam in general, it almost certainly will against the Kiwi dollar. The last 48 hours or so have been a bit of an anomaly, but in an oversold condition, it makes sense that we got a little bit of a relief jump from here. I'm watching the 0.58 level and the 50-day EMA both very closely to see if I get a short.
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