The NZD/USD continues to hold onto its gains made the past two and a half weeks while flirting with resistance levels that may be vulnerable.
As of this writing the NZD/USD is near the 0.58650 vicinity with its typical quick price action. The NZD/USD has crept upwards today after touching short term lows near the 0.57805 mark earlier. The ability of the NZD/USD to reverse upwards shows the currency pair is showing evidence of a solid bullish trend potentially building.
After a Long-Term Bearish Trend, Recent Results in the NZD/USD are still Suspicious
Speculators who continue to pursue the upwards momentum of the NZD/USD in the short term certainly cannot be faulted. The NZD/USD has a rather strong tendency to trend in concise direction. However, risk taking tactics must be always used. After the long-term bearish trend which saw the NZD/USD hit depths on the 10th of October, only three weeks ago, which had not been seen since 2020, the NZD/USD has responded with a flurry of upwards momentum.
Traders should not forget that reversals upwards in the NZD/USD have been seen before over the past year, only to watch the Forex pair actually sell off faster. Also rather critically, speculators must take into consideration the U.S Federal Reserve will likely raise interest rates tomorrow and pronounce their outlook of monetary policy. The upwards trend in the NZD/USD shows that financial houses likely believe the U.S central bank is going to sound less hawkish regarding future interest rate hikes tomorrow.
Analysts have been Proven Wrong Before regarding the U.S Fed and it could Happen Again
If the U.S Fed does raise rates as expected by 0.75% this might not hurt the bullish trend of the NZD/USD, but if the central bank says it will continue to raise interest rates early in 2023 again with the same force this could cause instant volatility. The NZD/USD as always will be affected quite a bit by the Fed’s monetary policy. Traders need to use solid risk management and gear their trading for choppy conditions emerging.
If resistance near the 0.58700 mark is penetrated higher, swift buying could be seen and a test of higher marks such as 0.587350 would be very intriguing.The NZD/USD is trading near one month highs and a move higher towards the 0.58900 level could prove to be a strong target for speculators short term. But traders should keep their targets realistic.
If the NZD/USD breaks above resistance short-term it could set off additional buying via speculative fever. Traders who are pursuing upwards momentum cannot be blamed, but they should remain cautious and be willing to cash in winning positions before they vanish. Upwards movement has been strong in the NZD/USD recently, but there is a major risk event on the horizon via the U.S Federal Reserve and speculators should prepare for the volatility which will come and create dangerous near-term.
NZD/USD Short Term Outlook:
Current Resistance: 0.58750
Current Support: 0.58123
High Target: 0.59225
Low Target: 0.57810