NZD / USD dips below 0.6900, but kiwi remains near post-pandemic highs

• The NZD / USD took a hit along with other risk assets amid a slight deterioration in sentiment on Tuesday.
• The kiwi is still trading near post-pandemic / multi-year highs and is considering a test of a key double top from Q1 2019.

The NZD / USD reached new post-pandemic / multi-year highs of 0.6919 during the Asian session on Tuesday, but has since come out of the boil and dropped back below 0.6900 and is now trading at daily losses, down 20 pips or 0.2% .

Kiwi price action will remain subject to risk appetite / USD dynamics this week

The only notable data so far this week were from GlobalDairyTrade (GDT) during the European afternoon on Tuesday; GDT’s price index beat expectations, rising 18% versus expectations of a 3.5% price drop, but this did little to affect the NZD at the time. Aside from Q3 producer price inflation data at 21:45 GMT Tuesday night, which is unlikely to cause much volatility in the NZD, there are virtually no major New Zealand domestic economic events this week. Therefore, the kiwi is likely to continue to trade based on increased risk appetite and US dollar conditions.

In terms of risk appetite, on Tuesday, risk assets saw a minor pullback from Monday’s Moderna vaccine hike, with weak US retail sales figures helping little, despite being outdated because the The focus is on economic performance in November and onwards as the country has been returning to lockdown only in recent weeks.

The S&P 500 is currently down 0.3%, crude oil markets are in the red, and as a result, the most risk-sensitive G10 currencies NZD, AUD, CAD and SEK underperform.

In terms of the US dollar; Despite the feeling of risk aversion today, the dollar index (DXY) lost around 20 points on Tuesday and is again below 92.50. The DXY is considering a test of monthly lows at 92.14, and weak US dollar conditions are offering some support to risk-sensitive pairs like NZD / USD and AUD / USD.

In recent days, the USD has apparently lost its status as a safe-haven currency and its relationship to, for example, stock market movements has become increasingly difficult to measure. For now, FOMC members, increasingly dovish / concerned about the pandemic, keep the USD on the defensive.

Kiwi bullish points to a test of the double top and long-term uptrend of the first quarter of 2019

The Kiwi has been a solid performance so far in November, gaining almost 4.5%. Bullish conditions have already pushed the coin to new post-pandemic highs and highs since the first quarter of 2019.

But significant resistance is on the upside; a double top formed in the first quarter of 2019 is located at 0.6930, as well as an uptrend that has been in play as resistance since mid-March this year, which is likely to come into play before 0.6950.

However, in the more immediate future, the NZD / USD will have to climb back above the 0.6900 level and break above Tuesday morning highs of 0.6919 before having a crack at these long-term levels.

In terms of the NZD / USD bearish scenario, aside from Tuesday’s lows around 0.6875 set earlier in the session, there is not much significant resistance down to the 0.6850 low / 0.6750 high; the minimum on November 13 is at 0.6811 and the maximum on September 2 and 18 at 0.6790 and 0.6798 respectively.

Weekly chart