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The New Zealand dollar also has to keep an eye on Asia, and what’s going on there.
- The NZD/USD has fallen rather significantly during the day on Tuesday, as we are testing the 0.59 level yet again. This is a market that I think continues to see a lot of negativity, maybe not necessarily anything to do with New Zealand itself, but the fact that the US dollar is by far the strongest currency in the world right now.
- After all, interest rates in America continue to climb, and of course, there is a huge “risk of sentiment” globally.
- That means that the US dollar becomes very attractive, and commodity currencies such as the New Zealand dollar can be hit rather hard by that. Because of this, you have to be very cautious with the pair right now, as we are testing a major low.
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At this point, it looks very likely that we will break down from here, and rallies at this point will more likely than not end up being selling opportunities. I don’t like the idea of buying the New Zealand dollar, or perhaps I should probably say it’s more like I don’t have any interest in going against the momentum of the US dollar.
Yes, there are some parts in the Forex world that are a little overdone, but either way, I think that a rally in the New Zealand dollar/USD pair is going to give you an opportunity to short yet again. The 50-day EMA sits just below the 0.60 level, which of course is a large, round, psychologically significant figure and an area where we’ve seen it a bit of downward pressure.
The New Zealand dollar also has to keep an eye on Asia, and what’s going on there. After all, New Zealand has massive amounts of exports to places like China, Indonesia, and so on. With that being the case, it certainly has a negative influence on what happens in New Zealand when it comes to the economy. Because of this, the RBNZ will continue to be a major thorn in the side of the New Zealand dollar as well, as they have to keep those rates so low. Ultimately, I think you get a situation where there’s just no real reason for this market to bounce longer-term, serving time at rallies, I look at it as an invitation to buy more US dollars.
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