By: DailyForex.com

The NZD/USD pair broke higher during the session on Wednesday, breaking above the recent and extraordinarily tight consolidation area that we have been in. This represents real strength reentering the market, and that means that we should ultimately breakout above the 0.8750 level. Pullbacks on short-term charts should continue to be buying opportunities, and as a result I believe that watching the short-term charts will be the way to go going forward. Ultimately, I do believe that we go higher and will eventually try to get to the 0.90 handle, an area that is significant on the longer-term charts.

Remember, this market often will move based upon general risk appetite and sentiment around the markets, and with that it’s difficult to imagine that this market will go higher as the Federal Reserve looks a bit softer than anticipated. This should continue to drive money into commodities and stocks, and that should be good for the New Zealand dollar in general. Ultimately, this market should go higher as paper assets continue to gain.

Pullbacks should be buying opportunities.

The Federal Reserve looks as if it’s ready to continue lower than normal interest rates going forward, even though it is going to continue the tapering by another $10 billion starting in July. However, it appears that the Federal Reserve is going to be very slow in its exit from quantitative easing, so that gives the markets a bit of time to play around with other higher yielding assets. Ultimately, this will move in the New Zealand dollar’s favor, as commodity markets will continue to offer nice buying opportunities for traders.

Shorting is absolutely impossible for me, and I believe that pullbacks will offer buying opportunities, if only on the short-term charts. I think that is plenty of support all the way down to the 0.85 level at the very least, and more than likely down to the 0.84 handle. With that, I find it very difficult to sell this market, and it does in fact look like one that is trying to build up enough momentum to breakout finally.

NZDUSD 61914

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