The Kiwi dollar has seen a bit of negativity on Thursday, as we are continuing to consolidate overall. At this point, the market looks like it is trying to work off a lot of froth from the shot higher.
NZD/USD
The New Zealand dollar initially tried to rally during the trading session on Thursday but has since pulled back a bit as interest rates are starting to curl a little bit higher in America. We are consolidating after a shot higher and forming possibly a bullish flag. The 0.59 level continues to be a bit of resistance as well, so I'm watching that one very closely.
The 200-day EMA sits below the potential consolidation or bullish flag, offering support, and it is worth noting that the 50-day EMA is starting to curl to the upside as well, maybe giving us the golden cross given enough time. The 0.5950 level could be a target based on the measured move of the bullish flag, but quite frankly, we need to have support hold in this general vicinity.
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Bullish Flag Formation and Geopolitical Risk
The New Zealand dollar is a currency that tends to do better in times where there's risk appetite, and risk appetite is all over the place right now as traders are trying to sort out what's going on in the Middle East and, of course, what's going on with interest rates. As they rise in America, the kiwi tends to fall; interest rate differentials start to work against it. But we'll have to wait and see how this plays out.
If we can get good news from a risk appetite and peace standpoint, then the New Zealand dollar stands a fair chance, would be my guess. Ultimately, this is a market that looks like it is trying to rally but is working off some froth from that candlestick from last Thursday that was so strong.
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