The New Zealand dollar gapped lower at the beginning of the session on Monday, but then rallied a bit to test the 0.70 region. That’s an area that of course has a certain amount of psychological importance, and the fact that we have is a market that I have no interest in trying to buy until we break above the 0.70 level, which would be a psychologically important barrier to overcome. I suspect that somewhere near the 0.7035 level, more money would come into this market as it would build a bit of confidence. There was certainly an oversold condition for a couple of days in the New Zealand dollar, but I think that there’s a fundamental shift in this pair due to the recent election of Labour. It’s clear that traders do not like the idea of the spending pattern of the new prime minister, so I think that we may continue to see negativity.
Commodity markets of course will have their influence on this currency, but I think at this point we have more influence coming from the US dollar side of the equation, as the Americans look likely to have some type of tax break coming. This of course is good for the economy, and of course with rising interest rates, it’s likely that the US dollar will strengthen longer term. I’m not ready to say that the selloff in the US dollars over, but it certainly seems as if the attitude is changing a bit as of late. However, I think there is a significant amount of support near the 0.68 level underneath, so there will probably be a battle near that region, but breaking down below there would be extraordinarily negative and send this market looking towards the 0.65 handle.
NZD/USD Video 24.10.17
This article was originally posted on FX Empire