NZD/USD fell during the session on Tuesday after initially trying to break free of resistance. The 0.79 level turned out to be far too resistive, and as such we found a reversal in the middle of the trading day. This of course was a very bearish signal, and as such many of the risk related markets followed suit.
The fact that at the time of this writing we are breaking below the 0.7840 level suggests to me that we are going to continue to fall. The Kiwi dollar is a risk sensitive currency, and this suggests to me that the risk sensitive currencies out there in general are going to be hit. The Tuesday session was a very bearish one, and although there are a certain amount of rumors floating around the markets of potential Federal Reserve easing, the truth is that the global markets are slowing down.
In a great representation of how all markets have been tied together lately, one of the things that really got this pair trying to break down below the previous consolidation support level was the release of Apple numbers for the previous quarter. Since the company is considered a barometer of global growth, as the Asians and the other emerging markets are jumping on the bandwagon, the fact that the company missed across-the-board with all metrics on the conference call suggest that the slowdown around the world is accelerating. Because of this one would have to think that commodities would fall out of that as well, and this of course will sell off the Kiwi itself.
Breakdown?
It appears that the Australian open that we are trying to break down this pair, and if you measure the rectangle that we recently have been caught in, it suggests that we will fall 200 pips roughly. This measures up nicely on this chart with the 0.7650 level which was previous resistance. The market likes to revisit these levels over and over, so as such it makes no surprise for me that we would fall down to that level. This does however suggest that the dollar will continue to reign supreme going forward. Full disclosure, I am presently short of the Kiwi dollar and continue to hold going forward.
