NZD/USD Forecast: Threatens the 200-Day EMA – 07 February 2023

I had the area between 0.64 and 0.65 marked on the chart for some time, and now you can see that the resistance has clearly held there. By rallying into that area and then falling the way we have, I think it shows just how much trouble is waiting above. You could probably make an argument for some type of double top, but I think it’s a little early for that. If we were to break down below the 0.62 level, then it confirms the “M pattern” that could send this market much lower, perhaps down to the 0.59 level that had previously been important, and of course is the “measured move” of the M pattern.

If we rally from here, I’d be hesitant to buy the New Zealand dollar after what I’ve just seen, but if we could take out the 0.65 level, then it’s likely that we could go much higher. I’m not holding my breath for this, but it is something that you need to keep in the back of your mind just in case.

As a general rule, the US dollar tends to move in the same direction against most currencies at the same time, and of course, you have to worry about the Royal Bank of New Zealand suggesting that it was basically done raising rates, and therefore with the hotter than anticipated jobs number on Friday, and the fact that the Federal Reserve is already stated that they have no interest in cutting rates, you have a situation where the US dollar should continue to pick up plenty of momentum. That doesn’t mean we get to the bottom in one move, but I think we could see more of those big nasty red candlesticks that we saw on Friday.