NEW YORK (Forex News Now) – The New Zealand Dollar has been a bit of an enigma for FX traders over the last year, as it has just been grinding and churning in a seemingly pointless exercise of futility, neither being bullish or bearish, but not quite range bound. Choppy is probably the only possible term to describe how the NZD/USD has behaved.
With the Reserve Bank of New Zealand mentioning that the rate tightening cycle will be more gradual this time around, the Kiwi fell last night, only to find solid footing in at the 0.75 area, forming a hammer at that important level.
The 0.75 handle has served as both support and resistance in the past, and is certainly a large psychological number for FX traders. The present move up will be confirmed if the two “shooting star” shaped candles can be overcome by the pair in the next few days, signaling that bears have been ran off.
The Kiwi Dollar is an extremely important commodity currency, and is often a way for FX traders to play the commodity markets by proxy. As such, if the grain markets, gold, silver, and other “softs” should be watched for clues as to if the New Zealand Dollar can crack the 0.76 area, which was the recently resistance level.
If FX traders can drive price below 0.74, the support area of the hammer formed yesterday, it would signal that we are heading back into the malaise of the last year when it comes to the New Zealand Dollar / US Dollar pair.
A break above could signal an attempt to run as high as the next psychological round number, 0.80, in the market. Of course, the world’s economic health needs to be underpinned in the meantime as well, which is hotly debated almost daily it seems.