The New Zealand dollar has initially fallen during trading on Wednesday but found enough support near the 0.7325 level to bounce and reach towards the 0.7350 level again. This is an area that is very resistive on the longer-term charts, and I think that a breakout above there would be very positive, perhaps sending the New Zealand dollar are looking for the 0.75 level over the next several weeks. However, that is not to be easy to do and I think we will see a bit of consolidation in the short term. I look at the 0.73 level below as supportive, and most certainly the 0.7250 level as well. At this point, I think that pullbacks should be buying opportunities in a market that is trying to find a reason to go higher. Once we get that reason, I think that we will see a lot of upward momentum suddenly released into this market as the New Zealand dollar is one of the least liquid of major currencies.
If we were to break down below the 0.7250 level, I think at that juncture we would probably see this pair go quite a bit lower, perhaps reaching down towards the 0.70 level as it would show a reversal of attitude. This would probably coincide with the general “risk off” environment, such as stock market selling off, and most certainly commodity markets doing the same.