NZDUSD is approaching the next key target area as it trades to a fresh 2022 low. What now? -ForexLive | Jewelry Dukan

NZDUSD falls towards key support

That NZDUSD

NZD/USD

The NZD/USD is a commonly quoted currency pair representing the New Zealand Dollar or Kiwi and the US Dollar. The pair is popular for exposure to a commodity currency, ie the NZD, which is helping to create risk appetite from forex traders. Like its counterpart in the antipodes, the Australian dollar, the NZD/USD is viewed as a carry trade, in part due to interest rate differentials favoring the NZD. The NZD is the 7th most liquid pair in the world at the time of writing, with the USD being the world’s most traded currency and the NZD being the 10th. What influences the NZD/USD? Offered by virtually every retail forex broker, the NZD/USD is a common pair that traders should have experience with. The pair moves based on investor sentiment and can be much more volatile than other pairs like EUR/USD, GBP/USD and others. Given that New Zealand is the world’s largest exporter of powdered milk, this metric is a key factor in moving the pair forward. Any sensitivity to milk powder exports is captured via NZD/USD. Additionally, tourism is a major contributor to the New Zealand economy and as such helps move the currency pair. Other important factors for the NZD/USD are the volume of exports to China as well as other important economic data from China. Central banks are also playing an important role in setting the currency pair’s direction, with both the US Federal Reserve and the Reserve Bank of New Zealand being closely watched by investors. Monetary policy is more than capable of abruptly moving the NZD/USD which can fluctuate much more than other normal pairs.

The NZD/USD is a commonly quoted currency pair representing the New Zealand Dollar or Kiwi and the US Dollar. The pair is popular for exposure to a commodity currency, ie the NZD, which is helping to create risk appetite from forex traders. Like its counterpart in the antipodes, the Australian dollar, the NZD/USD is viewed as a carry trade, in part due to interest rate differentials favoring the NZD. The NZD is the 7th most liquid pair in the world at the time of writing, with the USD being the world’s most traded currency and the NZD being the 10th. What influences the NZD/USD? Offered by virtually every retail forex broker, the NZD/USD is a common pair that traders should have experience with. The pair moves based on investor sentiment and can be much more volatile than other pairs like EUR/USD, GBP/USD and others. Given that New Zealand is the world’s largest exporter of powdered milk, this metric is a key factor in moving the pair forward. Any sensitivity to milk powder exports is captured via NZD/USD. Additionally, tourism is a major contributor to the New Zealand economy and as such helps move the currency pair. Other important factors for the NZD/USD are the volume of exports to China as well as other important economic data from China. Central banks are also playing an important role in setting the currency pair’s direction, with both the US Federal Reserve and the Reserve Bank of New Zealand being closely watched by investors. Monetary policy is more than capable of abruptly moving the NZD/USD which can fluctuate much more than other normal pairs.
Read this term traded to a new low for 2022, hitting 0.59282 so far. Friday’s low hit 0.59391.

The move lower brings the price within shouting distance of the weekly chart’s swing lows, which date back to April and May 2020. These lows hit 0.5909 to 0.5922 this week (see weekly chart above). Falling below these levels – and staying below them – is required to open the door for further selling control. A downward sloping trend line on the weekly chart also lies just below this level near 0.5900, increasing support in the 0.5900 area to 0.5922.

When multiple levels line up in a relatively tight trading range, countertrend traders will look to lean against these levels as risk can be defined and limited. In addition, trend-following traders can also lean with profit-taking.

In other words, traders who are buying and leaning against the range could sell on a break of the level and restore/establish the trend-following position with little risk. Conversely, if the price bottoms, these buyers could play back the recovery in the opposite direction.

So what would dip buyers look for on a rally against key support?

If the buyers manage to push the price back above 0.59391 (Friday’s low), that would be the minimum upside level to reach and break. Wednesday’s low at 0.5975 would be the next target followed by the falling 100 hourly moving average at 0.59865. Ultimately, a minimum target would be to break above the 100 hourly moving average if buyers are to start exercising more control. If that is missing and the salespeople still remain in the driver’s seat.

So keep these price dynamics in mind for traders today. There is good support down to the 0.5900 level for a trade but if the buyers want to show that they can regain more control then they have a lot of work to do starting with the return above 0.5939 and all the way through 0.5975 and the 100-hour MA at 0.59865.

NZDUSD is trading to a fresh 2022 low

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