- The NZD / USD captures new offers on Friday and is supported by a weaker USD.
- Optimism over the COVID-19 vaccine weighs on the safe haven USD and benefits the NZD.
- The overbought conditions on the daily chart warrant some caution for the bulls.
The pair NZD / USD is spreading your intraday earnings and has soared to the highest level since June 2018, around the 0.7030 region, at the start of the European session on Friday. At time of writing, the pair is pulling back slightly from that region, but it is still positive on the day around 0.7020.
Following the price consolidation action of the previous day, the pair has captured some new buying on the last trading day of the week and has capitalized on its recent positive momentum. Optimism about a possible coronavirus vaccine has continued to support market optimism. This, in turn, has weighed on the safe-haven US dollar and continued to drive monetary flows into the higher perceived risk NZD.
The NZD has received an additional boost from New Zealand Treasury weekly report, citing an upside risk to GDP growth forecasts based on the latest jump in retail sales data. The report also mentioned that “card spending has shown a steady recovery in November after some volatility, and the number of people receiving income support continues to decline.”
Meanwhile, the US dollar has been further hit by renewed hopes for further fiscal stimulus from the incoming Biden administration amid concerns about the economic fallout from escalating COVID-19 cases. Market concerns have resurfaced after the release of initial US jobless claims on Wednesday, which suggested that the imposition of new restrictions in several states of the United States is affecting the recovery of the labor market.
Aside from this, a further downward movement in US Treasury yields has put additional downward pressure on the dollar and has helped the NZD / USD pair to find acceptance above the region of 0.7015. Therefore, the current positive movement could also be attributed to some technical buying above the mentioned barrier. However, the overbought conditions on the daily chart warrant some caution before opening new bullish positions.
There is no major economic data release from the US on Friday. Therefore, broader market risk sentiment will continue to play a key role in influencing USD price dynamics and helping investors seize some significant opportunities.
NZD / USD technical levels
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