- The kiwi rebounds from 0.5610 and rises to 0.5755.
- US dollar falls amid Fed easing speculation.
- NZD/USD unlikely to consolidate above 0.5750 – UOB.
The NZD bounced sharply from 0.5610 early in the US trading session on Friday to hit fresh 2-week highs at 0.5765, aided by broad-based US dollar weakness.
Speculation on Fed Easing Affects the US Dollar
A Wall Street Journal report published early on Friday suggested that Fed officials would be open to discussing the size of future hikes, pointing to a reversal of the tightening cycle in December that has hit the US dollar.
The WSJ report offsets the positive impact of recent comments from Fed officials. Only on Thursday, Patrick Harker, president of the Philadelphia Fed, stated that the entity “will continue to raise rates for a while.”
In addition, an alleged intervention by the Japanese authorities has caused the yen to soar. As a result, USD/JPY has plunged more than 2.5% in a matter of minutes, which has affected all dollar crosses.
NZD/USD: More consolidation to come — UOB
UOB analysts expect the pair to continue to trade sideways in the coming weeks, with limited upside attempts below 0.5755: “Yesterday we highlighted that NZD “could rise above 0.5725, but sustained advance above it level still seems unlikely” (…) “Our update from two days ago (Oct 18, cash at 0.5675) still stands. As we have highlighted, the NZD appears to have entered a consolidation phase and is likely to trade between 0.5570 and 0.5755 for now.”
Technical levels to watch
Source: Fx Street
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