The New Zealand currency experienced a volatile session during Wednesday's trading reaching the downtrend line shown in the weekly timeframe, and eventually, break down.
A position under the 0.73 handle indicates a slightly bearish tone, but, the longer-term market attempts to establish an adequate pressure to accomplish a breakout.
The downtrend line is important as the commodity markets do not offer any help towards the NZD. Having said that, performing a breakout might be difficult however when doing so, it should be massive as it touches the level 0.75 in short order.
Alternatively, it is also possible to breakdown but it requires a gap under the 0.7250 region to be conference since that area is considered to be a “lower low”
The NZDUSD pair endured an extreme volatility in the last few sessions suggests the previous situation within the Forex market in general.
The Kiwi dollar is known to be the least liquid among major pair that’s why we normally see lots of noise.
The current level of 0.73 is basically a “fair value” for the pair, hence, short-term traders would likely resume moving from side to side around that territory.
In the longer-term, a confirmation in order to complete the breakout is necessary even for bullish traders, as a means to put money to play within a really choppy market.
In case that, agricultural futures gained higher value this would mean that the NZ dollar will receive some support. But it appeared that traders’ attention is focused on the current situation of the interest rate.
Andrea ForexMart, Official Representative