The New Zealand dollar went back and forth during the week, testing the 0.72 level on the bottom, and the 0.7350 level on the top. The market is very choppy and volatile, but as we have seen recently, the market breaking out has been very choppy and volatile. I believe that we will eventually break out to the upside, but there is a lot of noise between here and the 0.75 handle, so the work to be done is great. I think that short-term charts are probably going to be the way going forward, and I think that the volatility will give us a bit of a “buy on the dips” mentality, but keep in mind that commodities highly influence the New Zealand dollar, so the CRB Index should be watched as well.
Commodities
Recently, I have been watching the CRB Index, which is a measurement of commodities overall. It’s much like the Dollar Index, and the sense that it measures the entire market. As that arises, typically the New Zealand dollar will as well, and continue to correlate longer term. Having said that, if we break down below the 0.72 level, the market will probably fall towards the 0.70 level underneath, which is the next support and resistance barrier. However, we have recently seen the market turn its eyes towards the upside, and as we have been grinding sideways, to me it looks as if we are trying to catch her breath before the next move higher as we have seen such an impulsive move lately.
This article was originally posted on FX Empire