NZD/USD sidelined near 0.6550 after biggest single-day decline since Aug. 7

• NZD/USD is consolidating near 0.6550 after Wednesday’s 1.28% drop. 
• Kiwi has lost more than 200 pips this week. 
• The bulls remain on the sidelines despite the upbeat New Zealand trade surplus.

The NZD/USD bears are taking a breather, having pushed the pair lower by 1.28% on Wednesday. That was the biggest daily decline since Aug. 7 and the third straight consecutive decline. 

The recent decline from 0.68 to 0.6536 (overnight low) could be attributed to the broad-based US dollar demand. The greenback picked up a bid earlier this week, tracking risk aversion in the global stock markets and due to relatively less dovish comments by Federal Reserve policymakers. 

The Reserve Bank of New Zealand kept interest rates unchanged on Wednesday; however, the status quo decision failed to put a floor under the Kiwi. Similarly, the upbeat New Zealand data released early Thursday has so far failed to impress the Kiwi bulls. 

According to Stats NZ, New Zealand’s imports fell by more than $1 billion in August 2020, leading to the largest annual trade surplus since 2014. 
While imports declined by 16% in annualized terms, exports increased by 8.6%. 

At press time, the pair is trading near 0.550, representing a 0.11% gain on the day. 

The daily chart shows a double top bearish reversal pattern. As such, the bias would remain bearish while the pair is held below the double top neckline level of 0.6601 (Sept. 9 low). 

The dollar index has broken higher from its two-month range of 92.00 to 94.00. Hence, the US dollar’s broad-based recovery rally looks set to continue. 

Technical levels