NZD/USD rose for the session on Wednesday as traders bought the “risk on” trade globally. The Kiwi is always sensitive to these types of moves as it is representative of so many different commodities. The pair was always going to rise as the stock markets around the world rose, and the commodity markets as a whole did fairly well.
The 0.80 level was a massive resistance area, and the fact that the market managed to close so far above it for the session signals that this uptrend is set to continue in this market. The Dollar has done fairly well against most currencies lately except the so-called “commodity dollars” such as the New Zealand dollar, and as a result shows that the commodity trade is very much alive and well. If this pans out – the NZD/USD should be set to rise for the foreseeable future.
As long as we stay above the 0.80 level, this market is suddenly a “buy only” one. The health of the Kiwi is obvious, but the headline risks could have a say from time to time. The close looks very good at this point, and the 0.82 level should be the next area that the market tries to test going forward.
The trade for our money going forward is to buy on the dips as long as we are above 0.80 or so. We think this area should be supportive in the near term, and the level will be considered vital by a lot of traders. With this knowledge, we are very interested in seeing how price reacts to the level.
On a break above the highs for Wednesday shows that the momentum is picking back up, and if we get above that high – we are long of this market as it should signal more strength ahead. The market does look set to break to higher levels, so we aren’t ready to sell in this market at all. Buying short-term dips and new highs is the way we are going to proceed over the next several weeks in this pair.