By: DailyForex.com

The NZD/USD pair fell during the day on Thursday, as the reaction to the Reserve Bank of New Zealand and its rate increase was fairly muted. After all, the statement that accompanied the rate decision suggested that perhaps housing was cooling and New Zealand, and that of course could lead to a less than aggressive tightening cycle. Nonetheless, I do believe that the selloff is a bit overdone, and with that I feel that the market will ultimately find a way to bounce.

For me, I see that the 0.85 level is very supportive, and as a result I’m actually looking for some type of supportive candle in that general vicinity in order to start buying again. I believe that the region goes all the way down to the 0.8450 level at the very least, so I would expect buyers to step in at that point.

Overdone, and that could be an opportunity.

I believe that the selloff has been overdone, and that any type of support near the 0.85 level is probably going to be a decent buying opportunity. That should send the market looking for the 0.88 handle, which of course is massively resistant. We have to get above that area in order to head to the 0.90 handle, which is my longer-term target. The New Zealand dollar typically is very volatile overall, so this massive selloff really isn’t that big of a surprise.

I believe that we will finally break out sometime later this summer, or perhaps once the fall season starts, as traders the macro holiday. Nonetheless, I am not interested in shorting this market unless we get below the 0.84 handle, which would show a complete smashing of support, and thereby making me believe that the trend is falling apart for the buyers, and that we will see quite a bit of creative destruction. However, I really don’t think that we are going to break down below that area, so therefore I am simply looking for an opportunity to take advantage of a cheap Kiwi dollar.

NZDUSD 72514

Related Articles
  1. Investing

    Five Things to Consider Now for Your 401(k)

    If you can’t stand still, when it comes to checking your 401 (k) balance, focus on these 5 steps to help channel your worries in a more productive manner.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  4. Forex Education

    China's Devaluation of the Yuan

    Just over one week ago the People’s Bank of China (PBOC) surprised markets with three consecutive devaluations of the yuan, knocking over 3% off its value.
  5. Fundamental Analysis

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  6. Investing Basics

    Explaining Rehypothecation

    Rehypothecation occurs when an asset used as collateral for one party is reused in another transaction.
  7. Investing Basics

    What's a Price-Taker?

    Price-taker is an economic term describing a market participant who has no effect on overall market activity.
  8. Economics

    Explaining the Participation Rate

    The participation rate is the percentage of civilians who are either employed or unemployed and looking for a job.
  9. Economics

    Understanding Organic Growth

    Organic growth is the increase in a company’s revenue and value due to internal operations.
  10. Investing Basics

    Explaining Options Contracts

    Options contracts grant the owner the right to buy or sell shares of a security in the future at a given price.
RELATED TERMS
  1. Yield To Maturity (YTM)

    The total return anticipated on a bond if the bond is held until ...
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the ...
  3. Interest Coverage Ratio

    A debt ratio and profitability ratio used to determine how easily ...
  4. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  5. Receivables Turnover Ratio

    An accounting measure used to quantify a firm's effectiveness ...
  6. Remittance

    The term most commonly refers to money being sent via mail or ...
RELATED FAQS
  1. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  2. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  3. How are non-qualified variable annuities taxed?

    Non-qualified variable annuities are tax-deferred investment vehicles with a unique tax structure. After-tax money is deposited ... Read Full Answer >>
  4. Why would someone change their Social Security number?

    In general, the Social Security Administration, or SSA, does not encourage citizens to change their Social Security numbers, ... Read Full Answer >>
  5. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  6. Is Argentina a developed country?

    Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!