- The New Zealand dollar has gone back and forth during trading on Tuesday, as we sit in a region that has been supported more than once.
- I think this is an area that we are trading in, just below the 200 Day EMA, that could make or break the New Zealand dollar going forward.
- If we do plunge from here, I think it opens up a bit of a “trapdoor” in this market that could send the New Zealand dollar plunging quite viciously. If we rally, although I do see a couple places we could end up, I don’t think it is as easy of a move.
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The New Zealand dollar, and for that matter the Australian dollar, have both been rather lackluster over the last couple of months while everybody else has essentially destroyed the US dollar. If we are in fact entering a phase where the US dollar starts to strengthen against most things, the New Zealand dollar doesn’t stand a chance. It has been somewhat positive until recently, but we really are starting to look very weak in this market. On a breakdown from here, I’ll be looking for a move to the 0.57 level, but also, it’s probably worth keeping in mind that New Zealand and Australia both have the misfortune of being tied at the hip to China.
There are some questions about the Chinese economy at the moment, and of course we have the continued drama with the tariff situation coming out of the United States, which means that traders will continue to see a lot of volatility. Quite frankly, commodity currency such as New Zealand, Canada, and Australia are all in trouble because we don’t understand what the global trade situation is going to be. I do not think that changes anytime soon, and therefore I remain bearish of the Kiwi dollar. If we do rally, I’ll be looking for signs of exhaustion to start shorting again.
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