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MENAFN- Daily Forex)
- The New Zealand dollar has rallied a bit during the trading session on Friday, to reach the 50 Day EMA.
- The 50 Day EMA is an area that I think you would see a lot of resistance at from a technical analysis standpoint, but the fact that the 0.6350 level is sitting just above there will attract a lot of attention as well.
- After all, this is an area that's been important more than once, so I think a certain amount of“market memory” come back into play at this point.
Keep in mind that New Zealand is highly levered to Asia, which of course is struggling a bit at the moment, so I think you get a situation where traders will continue to be a little bit hesitant. Over the longer term I think it is likely that we will see more demand for US dollars, as the situation in Asia is untenable for massive growth. As long as China is slowing down, it's very likely that New Zealand will as well. While China is in exactly entering the next Great Depression, the fact that it is slowing down has people looking into the rate of change as a guide.
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The technical analysis for this NZD/USD market is obviously very negative, but I think you have got a situation where the market is going to pay close attention to the 0.6350 level, and I think that offers a little bit of a ceiling in this market. If we were to break above there, then it would obviously be a very bullish sign, but right now I don't know that we are necessarily going to go screaming to the upside and sliced through it. In fact, we did give back some of the gains as soon as we got near the 50 Day EMA, so this is a little bit of a whisper of potential resistance and trouble coming up. Ultimately, I think the US dollar prevails and I am simply looking for a reason and in exhaustion candle in order to start selling.
EURUSD Chart by TradingView
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