NZD/USD Forecast December 9, 2015, Technical Analysis

The NZD/USD pair went back and forth during the course of the day on Tuesday, showing signs of support near the 0.66 handle. However, you have to keep in mind that there is an interest-rate decision and more importantly an interest-rate statement coming out of Wellington today, so it’s likely that the markets will end up being very volatile. An interest-rate cut is expected, but is the statement will more than likely move the currency for the longer term. At this point in time, we feel that the 0.65 level should be supportive below, while the 0.6750 level above should be resistive. If we can break out to be the one of those ranges, we feel that this market can finally get a little bit of traction. In the meantime, we are probably best served sitting on the sidelines as interest-rate decisions and of course statements can make a massive amount of volatility up your out of nowhere.

All things being equal though, we believe that the downside is probably going to be more likely than the upside over the longer term. After all, the New Zealand dollar is highly sensitive to the commodity markets in general, and of course the Asian markets as New Zealand is an agricultural supplier to that continent.

The New Zealand dollar is also a bit of a barometer for the overall attitude of commodity markets, so of commodities on the whole start falling, the New Zealand dollar typically does as well. On the other side of this trade you have the US dollar, which is considered to be much more stable and much more of a “safety currency” than the Kiwi dollar. It really comes down to risk appetite, as the more there is of it, the more purchasing of the New Zealand dollar we see.

We believe the staying out of the market in the short-term is probably the best route, but we recognize that there are a couple of areas that should signal support and resistance. If the areas above are finally broken through, that should give us more clarity.