NZD/USD advances to session highs at 0.6945
|- New Zealand dollar ticks up to reach session highs at 0.6945.
- The USD loses steam ahead of Friday's payrolls report.
- NZD/USD: Further decline below 0.6860 remains likely – UOB.
The New Zealand dollar remains crawling higher against its US counterpart to reach session highs at 0.6945, with downside moves contained above 0.6900 so far.
The USD loses momentum as market sentiment improves
The kiwi has pared losses over the last sessions, following a nearly 0.8% decline over the previous two days that sent the pair to hit one-week lows at 0.6875 on Wednesday.
The market sentiment has improved on Thursday. Previous concerns about the surging inflation have eased somewhat as oil prices retreated from sever-year highs reached on Wednesday, while the fears of the congressional standoff regarding the US debt ceiling seem to have cooled off with all eyes turning towards the US Non-Farm Payrolls report due tomorrow.
Against this backdrop, investors remain cautious of placing large US dollar bets, which has triggered a mild USD selling. The US Dollar Index, which measures the value of the USD against a basket of the most traded currencies, is ticking down from 94.40 area to session lows at 94.10, yet at a short distance to 11-month highs at 94.50.
NZD/USD: Further decline below 0.6860 remains likely – UOB
From a technical perspective, the FX Analysis team at UOB warn about further depreciation beyond 0.6860: “Two days ago (05 Oct, spot at 0.6955), we highlighted that the recent weakness in NZD has come to an end and we expected NZD to consolidate within a 0.6880/0.7010 range. NZD dropped a few pips below the bottom of the expected range (low of 0.6877) yesterday before rebounding. While the underlying tone has weakened somewhat, NZD does not appear to be ready to head lower in a sustained manner just yet. Only a clear break of 0.6860 would indicate that NZD is ready to head lower. The chance for a clear break of 0.6860 is not high for now but would remain intact as long as NZD does not move above 0.6960 within these few days.”
Technical levels to watch
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