- NZD/USD fails to consolidate above 0.6700 and pulls back to 0.6690.
- The kiwi remains bid on a risk-on market.
- NZD/USD might still retreat to the 0.6545 area – UOB.
The New Zealand dollar failed on its first attempt to break resistance at 0.6715/20 area and has retreated to 0.6690. The pair, however, remains positive on the day after a 0.9% rally from 0.6620 lows.
Kiwi appreciates on risk appetite
The NZD/USD is appreciating for the second consecutive day on Tuesday, buoyed by a broad USD weakness amid a higher risk appetite. With the Americans going to the polls, the market seems to be pricing-in a Democrat victory that would pave the path to a large stimulus package and thus, undermine demand for the USD.
The dollar is dropping across the board with the US Dollar Index depreciating 0.6%, after reaching one-month highs, at 94.28 on Monday. The greenback rallied last week, as the increase of COVID-19 cases in Europe and the US, combined with the uncertainty about the US election hammered appetite for risk and triggered a rush for safety.
NZD/USD could still retreat to 0.6545 – UOB
In spite of the recent recovery, the FX Strategy Team at UOB reminds that the risk is tilted to the downside and warns about a potential pullback to the 0.6545 area: “he near-term bias is tilted to the downside but any weakness in NZD is viewed as part of 0.6590/0.6710 range’. NZD is currently approaching the bottom of the range and as downward momentum has improved, there is room for NZD to move towards the major support at 0.6545. At this stage, the prospect for a sustained decline below this level is not high. On the upside, a break of 0.6675 (‘strong resistance’ level) would indicate that NZD is still trading within a broad range.”
Technical levels to watch
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