- RBNZ inflation expectations increased to 1.59% for the fourth quarter of 2020 and provided a good boost to the NZD / USD.
- The uncertain political situation in the United States keeps the dollar bulls on the defensive and supports the upward movement of the pair.
- A sustained move above the 0.6800 level will mark a further bullish break ahead of the NFP report.
The pair NZD / USD has risen to its highest level since March 2019, with the bulls now looking to take advantage of momentum above the round 0.6800 level.
The pair has extended the strong gains of the previous day and has continued to move higher during the first half of trading action on Friday. Buying interest around the NZD accelerated following the publication of the Reserve Bank of New Zealand (RBNZ) inflation expectations, which rose to 1.59% qoq for the fourth quarter of 2020.
The data, although temporarily, they seemed to have dashed hopes for immediate political action by the RBNZ. This, along with moderate demand for the US dollar, has triggered a new wave of a short hedging move around the NZD / USD pair. The bulls did not appear to be affected by the prevailing cautious sentiment.
The wait for the final outcome of the exciting US elections is not over yet, although the markets have bet that Democratic candidate Joe Biden will become the next president of the United States. However, the fact that Republicans will retain control of the Senate has dashed hopes for large fiscal stimulus packages to support the economy.
The high degree of uncertainty has prevented the USD bulls from opening new positions. Furthermore, the wait for the results keeps investors nervous, although it has done little to hamper the current positive momentum of the NZD / USD pair, while The focus now shifts to the release of Friday’s monthly US NFP jobs report..
From a technical perspective, a sustained move above the 0.6800 level will mark a further bullish breakout above significant horizontal resistance. This, in turn, should trigger further technical buying and pave the way for a further short-term bullish move for the NZD / USD pair.
Credits: Forex Street

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