NZD/USD Forecast May 16, 2017, Technical Analysis

The New Zealand dollar has made a relatively positive move during the day on Monday, as we approached the 0.69 handle. However, it looks like we may be rolling over just a little bit to find a bit of resistance above. I think there is plenty of support, so I think given enough time we should turn around and reach to higher levels. However, I believe that the market is going to remain volatile, and you must keep in mind that the commodity markets in general have a massive influence on the New Zealand dollar overall.

Proxy for risk appetite

Simply put, the easiest way to think of the New Zealand dollar is that it is a proxy for risk appetite. Because the New Zealand economy is based upon exports to Asia, and mainly agricultural commodities, it makes sense that the New Zealand dollar tends to react to the overall “attitude” of the futures markets in general. That being the case, I believe that the markets will continue to be very difficult, as there is a significant amount of resistance above, and of course support below. You may be best served to play small positions based upon what the commodity markets do, and this is something that you need to have in the back of your mind. I believe that the markets continue to jump around, and therefore the New Zealand dollar will do the same. Below, I see a significant amount of support near the 0.6860 level, and see resistance at the 0.6950 level above. Ultimately, this is a market that will probably bounce around between those 2 levels over the next several days, at least until we get some type of clarity when it comes to the futures markets.
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