By FXEmpire.com
The NZD/USD pair fell hard during the session on Tuesday as European fears continue to haunt the markets. In late New York trading, former Prime Minister of Greece Papademos suggested that a Greek exit from the European Union was a very real risk. This sent a shudder of concern through the markets, and the riskier assets sold off suddenly in late trading. However, the Kiwi didn’t recover, and this is a very bearish sign.
The candle is closing at the lows for the session, and the pair is currently sitting on top of the 0.75 level. This area was the site of a nice 150 pip (or so) bounce over the last couple of sessions, and we believe this area is an important one if the bulls want to continue to try and defend the Kiwi.
Unfortunately, the Kiwi is highly correlated to the commodity markets and they have been absolutely beaten over the last couple of weeks as fear of a global slowdown continue to weigh upon the minds of investors around the world. The idea of Europe going into a recession or even depression in some parts would certainly slow down a lot of economic activity around the world.
The 0.75 level simply must hold, or there will be another wave of mass selling in this pair. Unfortunately, the Kiwi isn’t going to get much help from other markets it seems, and it is probably only a matter of time before this level gives way. The recent action has been brutal, but there is nothing on this chart that suggests that the selling can’t continue in the same manner.
The fear out there is palpable, and because of this it is going to be very difficult to suggest buying the Kiwi at this point. Yes, we can certainly see that this pair is oversold – but that isn’t an uncommon thing in this pair. The moves general are one way for a while, and then there is a longer period of consolidation in the pair before the next move. With this in mind, we are selling rallies on signs of weakness, and a daily close sub-0.75 as it shows a breach of support as well.
Click here to read NZD/USD Technical Analysis.
Originally posted here
