- RBNZ’s Inflation Expectations rose to 1.59% for Q4 2020 and provided a goodish lift to NZD/USD.
- The uncertain US political situation kept the USD bulls on the defensive and remained supportive.
- A sustained move beyond the 0.6800 level will mark a fresh bullish breakout ahead of NFP report.
The NZD/USD pair shot to its highest level since March 2019, with bulls now looking to build on the momentum further beyond the 0.6800 round-figure mark.
The pair added to the overnight strong gains and continued scaling higher through the first half of the trading action on Friday. The buying interest around the kiwi picked up pace following the release of the Reserve Bank of New Zealand’s (RBNZ) Inflation Expectations, which rose to 1.59% QoQ for the fourth quarter of 2020.
The figures, although temporarily, seemed to have dashed hopes for immediate policy action by the RBNZ. This, along with a subdued US dollar demand, triggered a fresh bout of a short-covering move around the NZD/USD pair. Bulls seemed unaffected by the prevalent cautious mood and drive flows away from the perceived riskier kiwi.
The wait for the final outcome of nail-biting US elections is still not over, though the markets have been betting that Democrat candidate Joe Biden will become the next US president. However, the fact that Republicans will retain control of the Senate dashed hopes for large fiscal stimulus packages to support the economy.
The high degree of uncertainty held the USD bulls from placing any bets. Adding to this, the wait for the results kept investors on edge, albeit did little to hinder the NZD/USD pair ongoing positive momentum as the focus now shifts to Friday’s release of the closely-watched US monthly jobs report – popularly known as NFP.
From a technical perspective, a sustained move beyond the 0.6800 level will mark a fresh bullish breakthrough an important horizontal resistance. This, in turn, should prompt some fresh technical buying and pave the way for a further near-term appreciating move for the NZD/USD pair.
Technical levels to watch
Share
