By FXEmpire.com
The NZD/USD pair initially rose during the session on Thursday as expectations of further easing out of the Federal Reserve reached a fever pitch. However, the Federal Reserve Chairman Ben Bernanke poured cold water on that idea in front of Congress. The failure to explicitly mention easing was disappointing to the market in general, and as a result the Dollar gained back some of its losses against the commodity currencies.
The pair is obviously in a downtrend, so selling was always going to be the correct move. The pair and commodity markets in general had been oversold, so this bounce would have been a bit of a “relief rally” for the buyers, but the fact is that very little has changed over the last couple of sessions, and as a result the market should continue the downtrend.
The action for the day looks horrible, and the daily candle ended up being a shooting star. The fact is that the rumor fueled rallies are lasting for less and less days now, and one has to think the markets are going into fear mode soon. The Kiwi will always get sold off when there is a lot of fear out there are the commodity markets get sold off. The Dollar reigns supreme in times of concern, and the trend of stronger US dollar looks ready to continue all around the currency markets.
The 0.75 level below looks as if it could be serious support, and it is because of this that we will have to watch that level. If it were to give way – the Kiwi will fall much further. The breaking of the Thursday lows has us selling with that 0.75 support level in mind, as it could be a target. Then again, we have been banging on it for some time now, and the possibility of a breakdown is starting to increase.
As far as buying, only a strong move to break the top of the shooting star can possibly be a signal at this point, and this looks unlikely given the fact that the 0.78 resistance level is just above. With this in mind, we fully expect to be short of the Kiwi yet again.
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Originally posted here
