Potential signal:
- I would buy the NZD at 0.6050 with a 100 pip stop loss, looking to get a move to the 0.6320 area.
The New Zealand dollar initially plunged during the trading session but has been saved by poor US economic data in the form of a negative 0.2 % preliminary GDP numbers. That being said, we continue to see resistance in the same area in the form of the 0.60 level. So, I don’t necessarily think we are ready to take off quite yet.
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That being said, if we can break above the 0.6050 level, then it's likely that the market could really start to take off. At that point, I think we might be looking at the 0.63 level. On the other hand, if we do fall from here, then the 50-day EMA, as well as the 200-day EMA, sits right around the 0.5875 level and are rising.
This is a market that I think continues to be very noisy and difficult to get traction as there is an amount of noise coming out of the trade tariff situation and of course the global growth situation. The global economy looks as if it is going to have a very erratic year and of course New Zealand is a major exporter to Asia specifically. So, there’s a lot of questions to be asked about that. They had recently cut rates in New Zealand while in America they have not, and in fact, despite the GDP numbers, we're probably still some distance from that happening.
So, with that being said, you have a situation where the New Zealand dollar might continue to struggle here. I think range bound trading is probably more likely than not. And in this environment, I would not get too big with my position size. However, at the 0.6050 level, you will have cleared a major sell push that really sent the New Zealand dollar lower, opening up the possibility of open air above there and really explosive rally.
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