New Zealand dollar rallies into resistance on Wednesday

The New Zealand dollar initially rallied during the day on Wednesday but found enough resistance in the neighborhood of the 0.69 handle to roll over and show signs of exhaustion. I believe that the downtrend should continue, and although there is a lot of noise out there, I also recognize that the New Zealand dollar has more of a “base” in the longer-term charts closer to the 0.68 handle, which of course makes a better target. With that in mind, I’m a seller but I also recognize that we may get the occasional rally. I think that selling in small bits and pieces along the way is probably the best way to trade this market, as it lends itself to be a short-term type of endeavor just waiting to happen.

If we did break above the 0.6925 handle, then we could go as high as the 0.6980 level before finding the next resistance area. That of course extends to the large come around, psychologically significant figure of 0.70, where I would anticipate a lot of downward pressure. I don’t have any interest in buying the key we dollar right now, the interest rate differential is closing between the two countries, and of course interest rates continue to rise in the United States. This should be a summer of dollar strength if the treasury markets keep acting the way they have, and I think this pair will be any different than many of the other ones. Beyond that, if commodity markets unwind a bit, that could be negative for this market as well.