The New Zealand dollar had a volatile session on Monday, dropping down to the 0.7150 region, bouncing, and slamming around in various directions. The market looks very thin at the moment, and therefore I think it’s probably best to step to the sidelines. Longer-term, I think there is a lot of support at the 0.70 level, which of course is a large, round, psychologically significant number. If we can break above the 0.72 level on a daily close, then I think that shows resiliency that could help the New Zealand dollar going forward. Keep in mind that the New Zealand dollars highly influenced by risk appetite and of course commodities. Because of this, we will have to pay attention to what the futures markets are doing, as they give us a general “feeling” of the possibilities for the Kiwi.
If the “appetite for risk” drop suddenly, that should put money reaching towards the United States, and a lot of bearish pressure on this market. I do think that the 0.70 level will offer a bit of a “floor” though, so I think that any dip at this point is probably short-term in nature. I also believe that a rally is probably short-term as well, I think that we are going to see a lot of back and forth trading in the New Zealand dollar as markets are a bit confused to say the least. I think that longer-term, we will have to break out of the range that we have been in, the right now it doesn’t look like we are ready to do so. Because of that, I remain on the sidelines more than anything else, and recognize that small positions are going to be the best way to play this market if you feel so inclined.
NZD/USD Video 03.10.17
This article was originally posted on FX Empire