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MENAFN- Daily Forex)
I recognize that we have recently bounced from a major support level in the form of the 0.6050 level. This is an area that's been important multiple times in the past, so it should not be a huge surprise to see that we have had a reaction to this region yet again.
Throughout the early hours of the session, we have seen buyers push the New Zealand dollar higher, but we struggled at the 0.61 level. This is also where we have the 50-Day EMA hanging about, so it does make a certain amount of sense that we would see resistance there. We had pierced the 200-Day EMA along the way, but I would also point out both of these indicators are very flat and sideways at the moment, so that does suggest that perhaps we don't have much in the way of momentum to follow through, at least not yet.
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Keep in mind that the New Zealand dollar is also a commodity currency, so that has a lot to do with what happens next. If we can get fairly strong momentum in the soft commodities, that will help the New Zealand dollar. Furthermore, it is also highly sensitive to what's going on in Asia, so that has a major influence on what happens next. Ultimately, this is a market that I do think is in the midst of testing the bottom of a larger consolidation area, and therefore a little bit of a bounce made quite a bit of sense. In fact, if we can break above the high of the Wednesday session, I anticipate that the New Zealand dollar will do everything it can to get back to the top of the consolidation area, which I currently see as the 0.62 level above.
On the other hand, if we were to break down below the 0.60 level, then I think the New Zealand dollar will plunge, and it will probably also be a sign that the US dollar is going to take off against other currencies. With that, you would have a situation where it would not only be this pair, but multiple others that would see the greenback strengthen.
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