By FXEmpire.com
The NZD/USD pair managed to bounce back after initially falling during the Wednesday session in order to form a hammer. This hammer was predicated on the 0.81 level, and looks as if we are getting ready to move higher again. It should be stated that the 0.81 level was the site of several shooting stars in a row, and it makes sense that it should now be supportive.
The markets expect easing out of the Federal Reserve within the next month or so, and as such this should put a bid in on commodity currencies such as the New Zealand dollar. Whether or not the Federal Reserve does end up easing its monetary policy is yet to be seen, but the markets believe that it is going to happen and that’s what matters. Any time this is the case, the New Zealand dollar will continue to be strong overall. In this environment, it is a matter of whether we want to buy the Kiwi dollar, is whether or not we are at a wise enough spot to do it. If we can break above the highs from the Wednesday session, we think that it is another buying signal for this favored currency.
Looking to the downside, we see 0.81 the support, as well as the 0.80 level. In fact the 0.80 level is what we consider to be the” floor in the market” at this moment in time. If we can get below that, it would suddenly become a bearish move but we don’t expect that to happen in the near future.
As long as the markets believe that stimulus is coming from several central banks, New Zealand should benefit as a commodity producer. This currency, the Australian cousin of it, and the Canadian dollar should all do well. As a result, this does look like we could see a continuation of the move higher and a one could even suggest that the recent consolidation from the beginning of June to the end of July suggests based upon the shape of the rectangle that we could in fact see a move up to 0.84 as the area was 300 pips tall. We certainly wouldn’t argue with that thesis at this point in time.
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Originally posted here
