(MENAFN- Daily Forex) The nzd/usd initially popped above the crucial 0.65 level but was smashed at that point to turn things right back around and threaten the 0.64 level. It's interesting because, for the first time in what seems like a lifetime, the Federal Reserve took something that federal reserve Governor Mester suggested that further rate hikes are still needed as the economy has further to go. She stated that policy rates should rise a little bit above the 5% to 5.25% range going forward. However, James Bullard stated later in the day that US rates are“almost in the restrictive territory.” So, there you go. However, he also suggested that a 50-basis point rate hike at the next meeting is very possible.
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When I look at this chart, it's obvious to see that there is a lot of noise between the 0.64 level at the 0.65 level, so it does make a certain amount of sense that we have stalled here. We have the 50-Day EMA breaking above the 200-Day ema forming the so-called“golden cross”, an indicator of longer-term bullish pressure. However, it's a lagging indicator like all moving average indications, and therefore I only read so much into it.Looking to Fade Rallies
If we were to break down below the 0.64 level, I think it's very likely that we fall enough to test those moving averages. Breaking for those moving averages will almost certainly send this market much lower. In fact, could kick off the next leg lower and have a lot of people starting to get aggressively short of the market. On the other hand, if we turn around a break above the top of the candlestick, then it's likely that we will threaten the 0.66 level. Anything above there opens the possibility of a big move to the upside, perhaps sending the market to the 0.70 level.
That of course is a large, round, psychologically significant figure, and an area that would attract a lot of attention in general. I think it would be difficult to break above there at the first attempt, but I'm sure the market would at least try it. Anything above there would become a longer-term“buy-and-hold market” just waiting to happen. As things stand right now, it looks like it's more of a“fade the rally” situation for the short term.
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