The NZD/USD Index had enjoyed a period of strong momentum over the past week with fluctuations limited to a range. The latest reversal suggests that the risks are lessened. As of this writing, the index is at $1.0860 and is well within the index’s trading range.
It remains to be seen whether the index will soon test its key support at $1.0395. Several market indicators point to higher volatility in coming days.
At the same time, the index is slightly below the index’s trading range. In fact, its range is a range of about 0.9940 and some $1.0960. Given the recent trend, a range of about 0.9240 could also be a possible target.
At the current level, the index remains well above the six-month lows of the previous two months’s highs. One area of concern is that of a potential bounce-back rally following the break-out, but it is too early to place any bets. There is still much work to be done before moving down the road to the NZD/USD Bottom.
After several weeks of indecision, the Federal Reserve has finally revealed its intentions and placed a 15% upward correction into action. Other key indexes including the FTSE100, Japanese Nikkei, and Dow Jones Industrial Average have suffered losses, while the German DAX and the Euro Stoxx 600 indices are all trading in the red. Stocks are falling like a ton of bricks and the chart-topper rally is dead and buried.
The central banks of Canada, Australia, and South Korea are taking the bull by the horns and introducing tightening measures. The US Dollar Index is witnessing some significant selling pressure, as indicated by its current sideways slide. Many experts believe that further sell off may take place after the US central banks unveil their next move.
USDJPY the Korean currency, is currently almost back to the previous rally levels as R.O.U. It is also getting close to the most recent short-term upper highs. Additionally, the Australian Dollar Index is also closing at its recent high points of yesterday.
In addition, the Danish Krone Index is touching a high-water mark, as per recent market data. This strongly suggests that the Japanese Yen Index will also start falling. The Danish Krone index is significantly higher than the EUR/DKK, meaning that it could fall some more.
Besides the forex world leader GBP/USD, the Japanese Yen Index and the British Pound Index are trading in parallel to have a strong rally. Only the Euro is not showing any signs of weakness at this point.
As it stands, it is looking as if the local currencies in emerging markets have gained more than the main centres. The UK Pound was already trading within its multi-year moving average (MA) target zone, and has not breached the round zero ceiling. The Danish Krone is still trading below the 200D mark, but is now in a bullish break out zone that shows potential for further gains.
USDJPY and BPG are keeping the local currencies on track with their recent moves. It remains to be seen if they will enter the floor against the recent recovery trend. However, market experts suggest that a long-term resistance is currently looming for the two local currencies.
Since the index is able to trade within the set range, the currency remains under no influence of the upcoming central bank action. The forex is poised to strike again, despite a prolonged sell off.