The New Zealand dollar tests major support on Tuesday

The New Zealand dollar has broken down a bit during the trading session on Tuesday, reaching down towards the 0.70 level underneath, an area that of course is a large, round, psychologically significant figure, and of course has seen action in the past. I suspect that we may try to bounce from here, but I also anticipate that there is a lot of resistance above, extending to at least the 0.71 level. In fact, I don’t have any interest in trying to buy this market until we break above the 0.71 level on a daily close. Ultimately, I think that as soon as we see signs of exhaustion, we should start reaching towards the 0.70 level as well. If we break down below there, the market probably goes even lower, perhaps down to the 0.68 level which is a major support level based upon the overall consolidation.

If we were to break down below the 0.68 level, that would unwind this market rather drastically. I don’t think that happens though, and I believe that we will either bounce from the 0.70 level for a return to bullish pressure, or breakdown to the 0.68 and then bounced. A breakdown below the 0.68 level would be catastrophic for this market. Keep in mind that the New Zealand dollar is highly sensitive to risk appetite, and of course we are sensitive to interest rates in America rising. The 10-year treasury yields going over 3% has spooked quite a few people, having them run to the safety of the US dollar.