(MENAFN- Daily Forex)
The nzd/usd initially shot hired there during the trading session on Tuesday, but give back gains above the 200-Day EMA. The 0.63 level above is a major resistance barrier, and it looks like we are going to struggle to continue going higher, and certainly don't have enough momentum to break above there at the moment. If we were to break above there, it would obviously change a lot of attitudes when it comes to the New Zealand dollar.
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However, we need to keep an eye on commodities and global growth in general to get a gauge on how the New Zealand dollar may behave, as it is considered to be a“risk on currency”, and one that people buy in times of economic growth. It currently seems as if the next move could be to the downside based upon the exhaustion, and all of the concerns around the world when it comes to the economic outlook. With this being the case, I do believe that we go lower, perhaps keeping an eye on the 0.61 level as a potential support barrier. If we do break down below that level, then it's likely that the New Zealand dollar goes much lower, perhaps down to the 0.60 level, breaking for the 50-Day EMA, and then returning to the 0.58 level.Volatility Likely to Pick Up
The volatility that we see at this point in time should only pick up, especially as we have so many different economic announcements coming this week that could come into the picture. We have to worry about the Core PCE numbers coming out of the United States, which is the Federal Reserve's favored way to look at inflation. If we continue to see that run hot, that will almost certainly strengthen the US dollar since people assume that the Federal Reserve will continue to keep monetary policy tight, thereby perhaps slowing down the economy in general.
Look at this chart, I do think that we have peaked in the short term, but if we were to break above the 0.63 level, then you must start having thoughts about the New Zealand dollar going to the 0.65 level eventually. That obviously will take another catalyst, but right now exhaustion is probably more likely than not going to be the issue.
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