NZD/USD Forecast May 11, 2017, Technical Analysis

The New Zealand dollar had an explosive moved during the day on Wednesday, using the 0.69 level for a springboard. The 0.6950 level has offered resistance, and at that point it looks like consolidation has taken over. This is a bit of an exhausted move, but if we can break above the 0.6950 level, we will more than likely continue to go higher, perhaps reaching towards the 0.70 level underneath. I believe that the pullback could be rather difficult, but currently it looks as if there is plenty of buying pressure underneath. I could also make an argument for a larger consolidation area though. That consolidation area would extend from 0.6850 underneath, and reach to essentially the current levels that we find ourselves trading in.

Fundamentals matter

Fundamentals matter when it comes to the New Zealand dollar, as it is so highly sensitive to commodity markets. The commodity markets continue to be very volatile, and that of course should continue to be a main driver of volatility in the New Zealand dollar itself. I think if you watch a basket of currencies, it might be easier to glean where the New Zealand dollar should be going. After all, there are a lot of ETFs that follow the overall commodity markets, and they tend to be reasonably correlated with the NZD/USD pair. Currently, I’m not a big fan of trading this market, but I do recognize that if we break out to a fresh, new high, then we will more than likely see continued buying opportunities. In the meantime, it’s probably best left alone as the volatility has been so extreme, and therefore there will continue to be easier trades to take in the currency markets now. The market needs to make a much clearer signal.