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NZD / USD retraces from highs of 0.7050 but remains elevated

  • NZD / USD briefly touched 0.7050 on Monday, before an attack of strength by the USD at the end of the month sent the pair lower.
  • However, the pair found solid support at 0.7010, and is now consolidating around 0.7030.

The NZD / USD It briefly eclipsed the 0.7050 level on Monday, before retreating sharply from highs. However, strong support was found just above 0.7010 and the pair rallied back into the green to trade around 0.7030, up roughly 10 pips or just under 0.2% on the day.

NZD remains a star among the G10

The NZD is looking to close the month with gains of 6.3% against the US dollar, significantly outperforming its antipodean counterpart AUD, which maintains more modest, but still solid gains of around 4.7%.

Unlike the AUD, the NZD has not been affected by any of the central bank’s actions (indeed, the news from the New Zealand government raising the idea of ​​including house price inflation in the inflation mandate of the RBNZ actually fueled the NZD) or tensions with China.

Meanwhile, the kiwi has been able to benefit from a drastic improvement in risk appetite in the broader financial market (many major equity indices hit their best levels in months in decades or even in their history), which has been driven by Vaccine hopes and the recent campaign of US President-elect Joe Biden election victory. Not that New Zealand really needs a vaccine right now; The country has proven to be one of the best in the world to contain the pandemic, another factor that keeps the NZD supported.

Global issues such as those mentioned above appear to continue to dominate NZD flows into the week ahead, amid the lack of more relevant domestic economic events in New Zealand. Strong Chinese PMI data and New Zealand ANZ business survey released during Monday’s Asia session have helped the kiwi get off to a decent start. Whether the current rate of appreciation of the NZD / USD can continue at the current rate is another question; Analysts note that the long positioning of the NZD is overloaded and that the RBNZ, which has shown a strong aversion to the strength of the NZD in the past, could be interested in the currency going down.

NZD / USD targets June 2018 highs above 0.7050

0.7050 is the next barrier that the NZD / USD must overcome, having tested it multiple times, but failed to break it on Monday. If this level rises, a test of the June 2018 high at 0.7067 should come in no time. Conversely, if the recent low continues, there is solid support at the 0.7010 area, as it already came into play on Monday. Below that, the psychological level of 0.7000 should also offer solid support.

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