- The kiwi loses steam after touching the resistance of 0.5870.
- The US dollar rallies after a two-day sell-off.
- NZD/USD should break above 0.5880 to gain upside traction — UOB.
The NZD has managed to make up lost ground after bouncing from 0.5790 early on Thursday, but the pair is struggling to find acceptance above 0.5870 and remains unchanged on the daily chart.
Kiwi recovery loses steam as dollar rebounds
The better-than-expected US Gross Domestic Product report helped ease negative pressure on the US dollar on Thursday. According to data released by the Commerce Department, the US economy expanded at an unexpected 4.6% pace in the third quarter, ending two consecutive negative quarters and calming recession fears.
The moderately positive tone in the dollar is putting a damper on the kiwi, which has risen around 2.5% in the past two days amid widespread dollar weakness, as investors begin to price in some easing of the tightening cycle. Fed Monetary.
The dollar index, which measures the value of the dollar against a basket of the most traded currencies, is trading around 0.6%, back above the 110.00 level after a nearly 2% reversal in the last two days.
NZD/USD: Above 0.5880 Sustained Appreciation Likely — UOB
Forex analysts at UOB note that a successful move above 0.5880 could trigger further appreciation: “Despite the rapid rally, the upside momentum hasn’t improved much. That being said, the NZD could go higher, but has to close for above 0.5880 before a further sustained advance is likely. Looking ahead, next resistance is at 0.5920. Support is at 0.5770, but only a break of 0.5740 would indicate that the NZD is not strengthening further.”
Technical levels to watch
Source: Fx Street
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