New Zealand dollar continues to struggle against US dollar
The New Zealand dollar rallied slightly during the trading session on Monday in an attempt to recover a bit of the losses. We have seen this pair become really parabolic in both directions lately, so a bit of a “dead cat bounce” could possibly be coming down the road. If it does, the 50 day EMA should start to offer resistance above, but just as that is potential resistance, a break down below the lows on Friday would be extraordinarily negative.
While the bounce could be rather impressive, trying to take a trade to the upside at this point based upon momentum is an excellent way to lose money. With that, it will take a significant amount of patience to sell the New Zealand dollar going forward. Remember, the New Zealand dollar is highly sensitive to the Asian economic situation, which of course isn’t getting any better in the week of the US/China trade war. While people are speaking to each other in more consolatory and agreeable tones, the reality is that the two countries are miles apart when it comes to agreeing on anything.
With all that being said it’s likely that the New Zealand dollar could get a little bit of relief rally, but a break down is just as possible. To the upside, the 0.64 level should be massive resistance, just as the 50 day EMA will be. It’s also possible that the 0.63 level could come into play, but right now that seems to be minor support and resistance. Either way, the US dollar should continue to strengthen longer-term, but a bit of a breather may be necessary in this market so do not be tricked into thinking that a bounce is an opportunity to try to “pick the bottom”, which of course is a fool’s errand anyway.
While the bounce could be rather impressive, trying to take a trade to the upside at this point based upon momentum is an excellent way to lose money. With that, it will take a significant amount of patience to sell the New Zealand dollar going forward. Remember, the New Zealand dollar is highly sensitive to the Asian economic situation, which of course isn’t getting any better in the week of the US/China trade war. While people are speaking to each other in more consolatory and agreeable tones, the reality is that the two countries are miles apart when it comes to agreeing on anything.
With all that being said it’s likely that the New Zealand dollar could get a little bit of relief rally, but a break down is just as possible. To the upside, the 0.64 level should be massive resistance, just as the 50 day EMA will be. It’s also possible that the 0.63 level could come into play, but right now that seems to be minor support and resistance. Either way, the US dollar should continue to strengthen longer-term, but a bit of a breather may be necessary in this market so do not be tricked into thinking that a bounce is an opportunity to try to “pick the bottom”, which of course is a fool’s errand anyway.