• The NZD/USD has shown a bit of a “risk on move” during the session on Thursday, but it’s worth noting that we are still very much in a consolidation area.
• Because of this, I think you probably need to look at this through the prism of the market trying to figure out what to do next.
• Underneath, we have the 200-Day EMA underneath the 0.63 level, but at the same time, the 0.65 level above continues to offer resistance. In that scenario, we probably have a lot of back-and-forths and indecisive trading ahead of us.

It also makes sense that we would not be willing to take major risks, as the liquidity is starting to fall apart. We are in a situation where the market is going to start focusing more on next year, and not so much was going to happen in the next 24 hours.

Volatility Ahead

Keep in mind that the New Zealand dollar is highly levered to Asian demand, as well as global growth. There are a lot of cracks in the global economy right now, so I do think that it makes a certain amount of sense that we would have to take a bit of caution at this point. If the market were to break down below the 50-Day EMA, it could confirm exhaustion in the Kiwi dollar, and send it down to the 0.60 level, which I do believe is a very real possibility. It’s difficult to put too much weight on the markets over the last two weeks, simply because a lot of position squaring has been going on by big firms.

On the other hand, if we were to turn around and break above the 0.65 level, it’s likely that the New Zealand dollar will then go looking to the 0.6750 level, and then the 0.68 level, an area that was somewhat interesting in the past. Keep in mind you must look at this through the prism of not only the Federal Reserve but whether the global economy continues to expand, so there are a lot of external forces at play here. That’s one of the great things about this pair though, it does give you volatility to trade from time to time. With this, I’m looking at this range with great interest.

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