NZD/USD show signs of stability during Wednesday session

The New Zealand dollar initially started the day bullish during Wednesday trading, testing the 0.7375 handle. The market breaking above there sends the New Zealand dollar looking for the 0.74 level, and then the possible top of the overall consolidation, the 0.75 handle. A break above that level would send this market much higher, perhaps sending it even further to the upside. I believe that short-term pullbacks continue to be buying opportunities, with the 0.7350 level underneath being massive support. If we can break down below that level, the market then will go to the 0.7250 level, and then possibly even the 0.72 level. Remember that the New Zealand dollar is highly sensitive to commodities and risk appetite, which is being thrown around right now by words coming out of both Beijing and Washington DC.

Because of the volatility that we have seen and risk appetite as of late, I believe that this market should probably be traded with small positions, perhaps giving us an opportunity to add once the market rallies, but between those moves, it’s probably best to stay reasonably light as the moves could be rather explosive based upon an errant comment.

So far, it looks as if the buyers are in control, and I do expect that longer-term that will be the case, but we need some type of stability and confidence reentering the markets that we can take advantage of and place a significant trade from. Longer-term, I suspect that risk appetite will eventually break above the 0.75 handle.