NZD/USD contained at 0.6400 with upside attempts capped below 0.6445

• NZD/USD’s decline finds support at 0.6400 with upside attempts capped below 0.6445.
• The kiwi remains weighed by risk aversion amid fears of a new COVID-19 wave.
• Rabobank analysts see the risk of a decline towards 0.6000.

The New Zealand dollar’s reversal from 0.6530 highs earlier this week has been contained at 0.6400 and the pair attempted to trim losses on Thursday although it has been unable to extend beyond 0.6445.

NZD remains weighed by the risk-off mood

The kiwi attempted to bounce up from 0.6400 on Thursday after the release of better than expected trade balance data. New Zealand’s trade deficit narrowed to $1.33 billion in May, after the $2.41 billion deficit posted in April, which improved confidence on a quick economic recovery and offered a fresh impulse to the NZD.

The move, however, lacked follow-though and stalled at 0.6445 area before pulling back during the European session, weighed by the negative risk sentiment. News reports about the worldwide increase of COVID-19 infections have dampened appetite for risk, pushing the New Zealand dollar lower against the safe-haven USD.

NZD/USD risking a dip towards 0.6000 – Rabobank

On a longer-term perspective, the Rabobank FX Analysis Team warns that RBNZ monetary policy might pull the pair towards 0.6000 area,  “We see risk of a pullback to the NZD/USD 0.60 area by year-end. In view of the huge reflation trade in recent weeks, we have revised this forecast up from 0.57.”