- NZD/USD staged a solid recovery from 11-year lows set earlier this Thursday.
- The kiwi got an additional boost from a modest rebound in the equity markets.
The NZD/USD pair built on its strong intraday recovery move from 11-year lows and refreshed session tops in the last hour, with bulls looking to extend the momentum beyond the 0.5800 mark.
Following an early slump to the lowest level since April 2009, the pair witnessed a dramatic intraday turnaround and has now rallied nearly 35 pips from the daily swing low to the 0.5470-65 region. The solid recovery lacked any obvious catalyst and was sponsored by some aggressive short-covering amid extremely oversold conditions, all against the backdrop of around 700 pips fall from weekly tops.
Meanwhile, the latest leg of a sudden pick up over the past hour or so could further be attributed to a modest recovery in the US equity markets, which provided a modest boost to perceived riskier currencies, including the kiwi.
However, growing market concerns over the economic fallout from the coronavirus pandemic, leading to a global recession continued underpinning the US dollar’s demand as a reserve currency and might keep a lid on any further recovery. Hence, it will be interesting to see if the recovery is backed by some genuine buying or runs out of the steam at higher levels and is utilized as an opportunity to initiate fresh bearish positions.
Technical levels to watch
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