Trading the New Zealand Dollar has virtually become a bet on the US S&P 500, and the coming week will likely prove little exception to recent moves. A considerable correction in said index suggests that short-term risks for both the S&P and NZD remain to the downside. Yet both the currency and equity markets saw a substantive rebound into late Friday trading, and it seems that selling pressure has waned near previous congestion support. The technical picture for the New Zealand dollar is admittedly unclear, and we may very well remain in wait-and-see mode until we see a sharp move in either direction. A drop in volatility expectations suggests we may be entering a summer volatility lull, and traders may need to prepare for increasingly choppy and directionless price action until further notice. - DR
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