- The New Zealand dollar has broken through major support during the trading session on Wednesday as the 0.5850 level has been broken.
- Now we’re threading the crucial 0.58 level.
- If we can break down below that level, it’s likely that we could go much lower, perhaps sending this market down to the 0.56 level.
- Short-term rallies will continue to be selling opportunities at the first signs of exhaustion from what I can see.
Cutting Rates and the Reaction
And with that being the case, I think we have a situation where you will be paying attention to the fact that New Zealand just cut rates and are likely to continue doing so. After all, New Zealand is highly sensitive to Asia. And as long as that trade war between the United States and China continues, it is going to have a peripheral effect. It’s worth noting that both the New Zealand dollar and the Australian dollar have underperformed against the U.S. dollar in comparison to some other currencies such as the Euro or the British pound. And as a result, I think you have to assume that if the U.S. dollar starts to strengthen overall, these currencies are going to be some of the biggest losers.
So, with that, I am very negative on this market, and I do think we continue to go lower, but the occasional bounce is possible offering from what I can see at least selling opportunities at the first signs of exhaustion, especially if you see the U S dollar strengthening against other currencies such as the Australian dollar, the Canadian dollar, et cetera.
I have no interest in buying at this point, although if we were to break above the 0.60 level, then maybe I’ll have that conversation.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
