The New Zealand dollar struggling at the 50-day EMA

The New Zealand dollar initially tried to rally during the trading session on Monday, testing the 0.7250 level, before rolling over and falling significantly. I think that the market will continue to chop around this area though, because the jobs number continues to be a major influence as to where we go next. With that coming out on Friday, I think it’s can be difficult to put a lot of faith into this market for a larger move. However, if we break down below the 0.7150 level, the market should then go down to the 0.71 handle, and then eventually the 0.70 level after that. The alternate scenario of course is that we would rally, but I don’t see that happening, unless of course we got some type of resolution to the fears about a trade war, something that I don’t expect to see over the next couple of sessions.

I think that we continue to see a lot of volatility, but between now and Friday you should probably keep your position size very small, and only add if the market proves your position to be correct. However, I also recognize that we are in a larger consolidation area, and it does favor the downside in general. The basement of this area is to be found at the 0.68 level underneath, and I think that will offer a significant amount of support that should keep the market somewhat afloat. If we did breakdown below there, the market could unwind very rapidly.