NZD/USD fell on Thursday as traders sold off the riskier assets. The news coming out of Europe was poor in some ways, and better in others. However, one has to wonder how much longer the market is willing to play this game with Europe – they need to get it together or implode completely. The markets almost seem to be saying “Let’s get it over with.”
The pair had reached the start of resistance at the 0.79 level, and would face it all the way up to the 0.80 handle. It is because of this that we suggested that a pullback was coming in yesterday’s video. The gap from November hasn’t been filled yet either, and as a result, we feel that the market will eventually fall to do that, right at about the 0.74 handle.
The commodity markets got hit quite a bit during the session, and as New Zealand is a big commodity exporter – mainly agricultural – there was little doubt the pair was going to fall. The Kiwi dollar itself isn’t necessarily a bad currency; rather the Dollar is simply the favored currency by traders at the moment. With this in mind, it is tough to sell the Dollar for any length of time in general, and the riskiest currencies aren’t the place to look for Dollar weakness on the whole.
The upside won’t be considered by us until we get a daily close above the 0.80 level. The level is a major resistance area, as well as a large psychological round number. The pair looks like it will be kept under that mark, while the 0.74 to 0.75 level looks like it will be supportive. With all of the noise out there, it would be surprising to see this pair bounce around in this range for a while. The overall bias in our opinion is down, but as Non-Farm Payroll is later today, we will wait to see the results. A bad number would send this pair much lower as money runs to the Treasury market. We like selling rallies, and will sell a bad jobs number which we consider anything under 120,000 or so. The number expected is 152,000.