The NZD/USD pair initially gapped higher over the weekend, and had a bit of follow through as rumors of a European bank bailout fund have been circulating around the trading desks globally. The fact is that every few days a rumor comes out about how Europe is going to be saved, and then the initial pop gets sold off. We think this is happening now as well.
Because of this, we are selling this pair on a sub-0.75 daily close. As for buying, it is going to be almost impossible as the Kiwi dollar is so highly correlated with commodity markets and risk in general. In a situation that a headline can come out and send risk appetite lower immediately it is always going to be hard to buy the “riskier currencies” like the Kiwi. Right now, the Dollar is king, and we don’t want to bet against it. Rallies can be sold as well, once weak candles show up.