Euro finding support as Americans come back to workJanuary 22, 2019
Has the Pound Bottomed?February 17, 2019
The New Zealand dollar spent the early part of Monday trying to rally again, as we continue to see a line of optimism out there when it comes to central bank policy. After all, the Federal Reserve is looking like it’s walking back a little bit from its bullish stance, in theory that should help emerging markets. New Zealand is a great beneficiary of emerging markets as it is essentially the “grocery store” to a lot of Asia. However, as the day wore on we started to see Japanese yen strength in general, and the cross current of major technical issues in the New Zealand dollar/Japanese yen pair seems to have finally caught up to the market, at least for the short term.
Looking at the chart, we are at the 50% Fibonacci retracement level from the major swing lower that occurred recently, and although we have had a nice rally, it’s easy to see that the velocity of the fall was much greater than the grinding that we had seen on the upside. Beyond that, there’s also the 50 day EMA, pictured in red on the chart, that is slicing through the candlestick. While still only about halfway through the American session, it certainly looks as if we are starting to run into a bit of trouble.
With that being the case, I suspect that we are going to roll over and look for support closer to the 73.25 handle. Up above, I see major resistance at the 75.50 level, so if we get a bit close to that, I would then be somewhat concerned. The markets of course have a lot to worry about, and that typically doesn’t bode well for the Kiwi dollar longer-term. That does, however, help the Japanese yen as it is considered to be a “safety currency.” I suspect that we are going to see a couple of negative days here.