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NZD/USD recovery extends beyond October’s top, at 0.6680

2020-10-23 08:10    FXYEAH
  • NZD/USD rebound from 0.6635 has reached fresh one-month highs above 0.6680.
  • The kiwi holds its ground amid the broad-based USD recovery.
  • NZD/USD seen trapped between 0.6570 and 0.6700.

The New Zealand dollar has resumed its uptrend from Tuesday’s lows at 0.6550 and is on track to post its second positive day in a row after shrugging off a negative opening and stretch to one-month highs at 0.6688.

The kiwi extends gains despite US dollar strength

The NZD has held steady against the overall US dollar strength amid the negative market sentiment. Trump's comments blaming the democrats for the lack of progress on the US stimulus negotiations have dampened risk appetite during the Asian and early European sessions and fuelled a US dollar comeback.

The NZD/USD pullback, however, was contained at 0.6630, about 40 pips below Wednesday’s top. The pair has managed to pick up with risk aversion easing during the US session and markets popping up into positive territory, to explore levels beyond 0.6680 for the first time since late September, although the breakthrough still needs to be confirmed.  

NZD/USD upside attempts expected to be capped below 0.6700 - UOB

From a technical perspective, the FX analysis team at UOB remains sceptical about the chances of a sustained NZD rally, expecting the pair to remain trapped between 0.6570 and 0.6700: “We have held the same view since last Friday (16 Oct, spot at 0.6600) wherein ‘downward momentum has improved tentatively; NZD has to close below 0.6570 before a more sustained down-move can be expected’. NZD dropped to a low of 0.6555 on Tuesday (20 Oct) but did not close below 0.6570. The break of 0.6660 yesterday indicates that the recent mild downward pressure has eased. The current movement is viewed as part of a consolidation phase and NZD is likely to trade within a 0.6560/0.6700 range for now.”

Technical levels to watch

 

 

NZD

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