The New Zealand dollar continues to see a lot of noisy trading, as we initially sold off in early Tuesday trading, only to turn things around and see a bit of a recovery.
NZD/USD
The New Zealand dollar continues to be messy on Tuesday as we are looking at the 0.59 level with a bit of hesitation. This is an area that's been resistant for a while now, so it'll be interesting to see if we finally break out above there. During the previous session on Monday, we had spiked above there, only to give back the gains, and now it looks like Tuesday is trying to form some type of hammer.
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This would, of course, be a very positive turn of events, but the market needs to clear the shooting star from the previous session before I get interested. If we do break out to the upside, the 0.5950 level could be a target, but I also recognize that the New Zealand dollar is highly sensitive to global risk. And with that being the case, it is probably just as confused as everybody else.
Ceiling? Possible.
Overall, this is a market that seems to be looking at the 0.59 level as not only a ceiling, but maybe fair value. It's worth noting that recently we had seen the market test the 200-day EMA to the downside and has since found a little bit of bullish pressure, but it just doesn't have enough to get aggressive quite yet.
Ultimately, I think this is a scenario where traders are suspecting that the weak economic numbers coming out of the United States might offer a little bit of an opportunity for shorting the US dollar, but at the same time, with inflation so high and headline risk, it makes sense that the New Zealand dollar stutters a bit. Ultimately, the next large impulsive candlestick in one direction or the other may determine where we go next as confusion reigns.
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