NZD/USD Price Forecast January 25, 2018, Technical Analysis

The New Zealand dollar broke out to the upside during the day on Wednesday, as we reached as high as 0.74. We are getting close to the top of the overall longer-term consolidation area, which extends to the 0.75 level. The 0.68 level underneath is the bottom of this larger consolidation area, so we are getting a bit expensive. However, it’s obvious that the US dollar is struggling mightily, so I think it’s only a matter of time before we continue to go higher. I think pullbacks will offer value and look at them as such. If we can break above the 0.75 handle, the market should continue to go much higher, perhaps reaching towards the 0.7750 level, and then eventually the 0.80 level after that.

I suspect that we will continue to see volatility, and I also suspect that a short-term pullback is coming. However, don’t be enticed to start selling, as there is far too much in the way of anti-US dollar sentiment out there to go against the trend. Pay attention to the commodity markets, and of course the overall risk appetite as it gives us an opportunity to gauge with the New Zealand dollar’s going to do next as it is so sensitive to it. This is the longer-term correlation that we typically see, so given enough time commodities and the New Zealand dollar should both rise, this is especially true if we see the “soft commodities” rallying. Shorting would take a complete change in attitude of the Forex world.

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