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Based up the latest data from Commodity Futures Trading Commission, Bloomberg came out with the headlines suggesting a fall in the New Zealand dollar (NZD) ahead of the Reserve Bank of New Zealand (RBNZ) should this week’s data from New Zealand linger.

Key quotes

The move comes as the currency’s more than 20% surge from its March low has it nudging overbought territory on technical charts. But caution is warranted after investors were burned twice this year by the central bank.

The kiwi rallied sharply on Feb. 12 after funds were wrong-footed when the RBNZ signaled it was unlikely to cut interest rates this year. A month later traders were scrambling to keep up with a rout in the currency after it slashed its benchmark interest rate by 75 basis points.

Technical indicators also suggest further upside in the currency may be limited near-term, with resistance at its Dec. 31 high of 0.6756 versus the greenback approaching. The slow stochastics gauge, which provides a clue to momentum, is nearing oversold territory.

The kiwi’s continued rise on a trade weighted basis since RBNZ’s June meeting also raises the prospect of policy makers trying to jawbone the currency lower. At their last gathering they noted the negative impact of its appreciation on export earnings.

To be sure, whether investors resume stick with bearish bets or turn bullish won’t entirely ride on what happens in New Zealand.

The nation’s deteriorating relations with China and coronavirus flare-ups in all parts of the world will keep them on edge for some time to come.

FX implications

NZD/USD remains pressured around 0.6630 as the news weigh helps extend Friday’s pullback from the highest since early-January 2020.