The New Zealand dollar pushed above its 200-day EMA again on Wednesday, testing an area DailyForex analyst Christopher Lewis says shows a lot of selling pressure. A break above 0.5860 could open a run toward 0.5950, while a slip under 0.58 would turn him bearish. Traders are watching the RBNZ for signs the hawkish tone holds.
The New Zealand dollar rallied again during Wednesday's session, peaking above the 200-day EMA just as it had during Tuesday's trade, according to DailyForex analyst Christopher Lewis. He sees the zone right above that moving average as one showing a lot of selling pressure, which leaves the question of whether the pair can keep climbing.
A clean break higher would change that picture. Lewis argues that if NZD/USD can break above the 0.5860 level, it is possible the kiwi could continue much higher, perhaps toward the 0.5950 level, an area he expects many traders to watch closely.
The downside case is just as defined. He says a break below the 0.58 level would make him very bearish on the market, while a move above 0.5860 could turn him bullish.
The pair is getting a little stretched, but it is paying attention to the RBNZ and the chance that policymakers could raise rates again. Lewis notes the Federal Reserve remains a bit of an open question, yet rates are higher in America, so buyers here are swimming upstream a little.
Because of that tension, he reads the current zone as a significant point of inflection that could decide the next 200 pips in either direction. He wants to see how the US dollar behaves against other currencies, not just the kiwi, before committing to the next move.
Source: DailyForex
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