New Zealand dollar rallies significantly on Monday

The New Zealand dollar has rallied significantly during the trading session on Monday, reaching towards the 0.6950 level. We have pulled a bit lower from there, looking likely to find buyers underneath. The markets continue to find buyers underneath as we get “higher lows”, assigned that we are ready to continue to go higher. However, longer term I think there is still a lot of negativity just waiting to happen. The 0.70 level above is a major “ceiling” in the market, and I think that it is only a matter of time before the sellers will come back in and push this market lower. However, in the short term I think that short-term traders will continue to pick up little bits and pieces along the way.

If the 0.68 level underneath gets broken to the downside, the market probably unwinds to the 0.65 handle rather quickly. Ultimately, I think that we are going to be very noisy in this market, as we continue to see a lot of confusion around the pair, as we also see in the Australian dollar simultaneously. However, one thing that I would point out is that it was Memorial Day in the United States, so that would make this market a bit less active and liquid than it typically would be in the second half of the trading session. If we did manage to break above the 0.70 level, that would be a very bullish sign and could send this market looking for the 0.72 handle, but I would need to see a daily close above the 0.70 level to be convinced.