New Zealand dollar falls immediately on Monday

The New Zealand dollar has broken down significantly during the session on Monday, reaching down towards the 0.7050 level, an area that has been supportive a couple of times. However, this is minor support at best, and I think that if we rally from here it’s only a matter of time before the sellers come back in and push this market lower. I believe that rallies are to be sold, and that the 0.70 level underneath is much more supportive than the area that we have been testing, and I think that market participants will continue to try to get down there. If we break down below the 0.70 level, the market probably goes to the 0.68 level after that. The 0.68 level is the bottom of the larger consolidation area, so I expect a bigger fight in that area.

Rallies of this point are to be trusted until we break cleanly above the 0.71 level, and perhaps even on a daily close. The New Zealand dollar is highly sensitive to commodities in general, so keep that in mind. If we can see a bit of bullish pressure in the commodity markets, we might get a potential rally. However, I believe that the US dollar is rallying due to the interest rates rising in America, which of course is a longer-term driver of currencies overall. Because of this, I do believe that we are going lower eventually, so my base case narrow is to sell the rallies. If we did break above the 0.71 level, we could go to the 0.72 level next, which would be the next area of fighting.