The market will more than likely continue to be very noisy, but I still favor the downside and would be looking for signs of exhaustion on short-term charts to start shorting.

The New Zealand dollar initially tried to rally on Wednesday but gave back gains near the 0.69 level to plunge all the way down to the 0.6750 level at one point. We have since bounced from there a bit, but it certainly took a very bearish turn after initially trying to rally. The 200-day EMA has acted as a brick wall for a couple of days in a row now, and now it looks like we are threatening to break down below the 0.6750 level. If we do, then I think it will open up a move down to the 0.66 handle, possibly even the 0.65 level.

Keep in mind that the New Zealand dollar is highly levered to commodities, which have been getting a bit stretched at this point and have been pulling back after a very big move. That being said, the market has to price in the idea of a global slowdown, some places like New Zealand will certainly feel the pinch as they are major exporters. As the rest of the world’s economy is slowing down, exports coming out of New Zealand will as well.

Another thing to pay close attention to is the fact that there seems to be a lot of “risk-off” type of trading going on out there, which means that the US dollar will continue to attract a lot of attention. As long as that is the case, then I think the New Zealand dollar is going to struggle overall. It is worth noting also that the other risk appetite-based markets have been struggling, with the exception of the yen-related pairs but that has more to do with Japanese rate controls than anything else.

The market will more than likely continue to be very noisy, but I still favor the downside and would be looking for signs of exhaustion on short-term charts to start shorting. The New Zealand dollar does tend to move rather rapidly at times, so please keep that in mind as you are trading it. The market needs to break above the 0.69 level for me to even start to think about the upside, and even then it is probably better to wait until we get a break above the 0.70 level, as it offered so much resistance previously.

It is interesting that we have seen such a huge difference between commodity currencies and many of the other ones against the greenback, but there is nothing on this chart that suggests weakness.

The New Zealand dollar broke higher on Tuesday to break above the top of a shooting star from the previous session. This is a very bullish sign, and we have seen this market break well above the 200-day EMA, and now it looks as if we are going to make a huge run towards the 0.70 level.

This makes sense considering that the Royal Bank of New Zealand has been very vocal about the fact that it likes that the market is pricing in the higher interest rates. Furthermore, they are very likely to do exactly that, so there should be no surprises. As long as commodities continue to pick up momentum to the upside, it is likely that the New Zealand dollar will be a bit of a beneficiary. The market continues to be very noisy overall, but it looks as if we are simply “stair stepping” our way higher.

The 200-day EMA underneath at the 0.6869 level and offers a little bit of support. If we were to break down below that level, it could start to swing the pendulum in the other direction, perhaps allowing the New Zealand dollar to drop to the 0.68 handle. While that is not necessarily what I expect to see, the reality is that you should always keep the other side of the trade in the back of your mind. This would more than likely have something to do with a major “risk-off” type of move around the markets overall. After all, the US dollar is considered to be a safety asset, so a lot of people will be paying close attention to whether or not people are looking to hide. After all, there are plenty of reasons to think that people may go hiding over the next couple of sessions.

If we can break above the 0.70 level, that could be a very strong sign for the New Zealand dollar, allowing it to go much higher. If we continue to see this massive commodity boom, that very well could happen, but I think it would more than likely only be after some type of consolidation and momentum building in order to make that move happen. It is interesting that we have seen such a huge difference between commodity currencies and many of the other ones against the greenback, but there is nothing on this chart that suggests weakness.