- NZD/USD halts its eight-day rally at 0.6915 and retreats to 0.6840.
- The kiwi loses steam as market sentiment deteriorates.
- Below 0.6845, the NZD’s upward momentum would ease – UOB.
The New Zealand dollar has halted its impressive eight-day rally against the US dollar on Thursday. The pair has been unable to hold above 0.6900 and has pulled back to session lows at 0.6840.
Kiwi loses steam as market sentiment worsens
NZD/USD bulls have run out of steam after hitting a fresh 20-month high at 0.6915 on Thursday’s early trading and pulled back during the European and US trading sessions with risk appetite fading and the main equity indexes in the red.
As the enthusiasm about the promising results of Pfizer’s COVID-19 vaccine wears off, the market has shifted its focus back to the surging coronavirus cases in the US and Europe, coming to terms with the fact that the vaccine will not arrive soon enough to avoid strong economic damage this winter.
Coronavirus fears combined with resurfacing concerns about the direction of the major Central Banks’ monetary policies and the uncertainty ahead of the US Government transition have prompted investors to adopt a more cautious approach that is hurting risk-sensitive currencies like the kiwi.
NZD/USD: Breach of 0.6845 would ease the bullish trend – UOB
The FX Analysis Team at UOB warns that the NZD might have reached its target and that a clear decline below 0.6845 would confirm it: “While the rapid rise appears to be overdone, strong upward momentum suggests further NZD strength. However, the major resistance at 0.6940 is unlikely to come into the picture (0.6920 is already a strong level). On the downside, a break of 0.6845 (minor support is at 0.6865) would indicate the current upward pressure has eased.”
Technical levels to watch
Share
