New Zealand dollar bounces around on Thursday

The New Zealand dollar pulled back a little bit to show signs of support underneath, only to bounce again. It looks as if the market is going to continue to go higher, perhaps reaching towards the 0.71 level, and then eventually the 0.72 level. Ultimately, I think that we are going to find buyers on dips, and unless we were to break down significantly below the 0.70 level, that should continue to be the case. If we were to break down below the 0.70 level, that could break down rather significantly.

We have been grinding higher as of late in general, so I think this is a simple extension of what we have seen. I do believe that the US dollar was a bit overbought and certainly got ahead of itself against most currencies, and that’s part of what you are seeing here. Beyond that, I would also point out that we were getting dangerously close to major support based upon a two-year consolidation area with the bottom of it being at the 0.68 handle. Because of that, we had a significant bounce and that of course is exactly what you would expect. The question now is whether or not we can keep up the momentum?

In a vacuum, this market looks as if it should go all the way to the 0.75 level. Obviously, there is a lot going on with the US dollar around the world anyway, so I don’t know if we make it to that height again. However, in the short term it certainly looks as if the buyers have the upper hand.