Last week Government Representative said that he sees NZDUSD continue to gain strength but cannot do anything to limit it. Even though he might be incline to think that strong New Zealand Dollar is good for the consumers as it would mean that they would benefit from cheaper import.
Beyond certain point it is hardly any wisdom as they are net exporting economy and would not fare well if the New Zealand Dollar continue to strengthen which could be become a disaster if they then also went on the put up the interest rate when all other major economies are engaged in some form of quantitative monetary easing.
However based on what the price chart it is not at all suggesting this apparent strength to continue in the short & intermediate term for the following reason:
1) Since the 2000 low it has formed 2 to the upside with top being in July 2011. Either we have this as major top, one that will not be challenged for many years.
2) Or that we have intermediate top that will be retested after the pair has experience retracement in the order of 38.2% (= 0.70) or greater of the entire rise in the form of ABC , of which, it has already completed the waves "A & B" in the form of and we have just topped, with a which is when found in this position of the wave structure. This is accompanied by momentum divergence at several degree on Daily & Intra-day time frame.
3) That the Waved "A & B" of the Flat contained abc , therefore wave "C" now should be in 5 swings to the downside to 0.70 level or lower. If not then it might evolved into more complex sideways congestion pattern.
4) Last Tuesday's Report seems to suggest that the Commercials have started to reduce their long Exposure as the price still continued to progress upwards for rest of the week.
5) Last weeks Thursday & Friday's candles appear to be indicating potential configuration.
6) Correlation chart of EURNZD & NZDUSD (Inverted) suggest NZD weakness over intermediate term. http://www.screencast.com/t/guKWqNm60
Similar weakness is already evident in the AUD.