NZD/USD consolidates around 0.7050 having broken to the downside of bullish trend channel

  • NZD/USD has moved sideways since US jobs data and is consolidating around the 0.7050 mark.
  • The pair recently broke to the downside of a medium-term upwards trend channel, implying further choppy trade may lay ahead.

NZD/USD has been moving sideways in recent trade, with the price action swinging either side of the 0.7050 level. At present, the pair trades with losses of around 30 pips on the day, or 0.4%.

NZD props up the G10 performance table

No specific news or themes are weighing on NZD today. Rather, it seems that following a prolonged period of outperformance over the last month vs many of its other major G10 counterparts, NZD is finally undergoing some profit-taking, which has taken the wind out of its sails.

NZD lost some momentum during the Friday Asia session in tandem with AUD following soft Australian retail sales data. Meanwhile, US jobs data does not seem to have had a lasting reaction on the pair, which trades pretty much bang on its pre-data levels at just under 0.7050.

HSBC spot FX trader Brent Donnelly notes “that the high Sharpe of the (recent) rally and the prolonged, grinding nature of the move tends to mean all the short positions have been squeezed out by the time it breaks down”. That might mean the door is open for fresh shorts to pile in.

Moreover, Brent posits that more QE from the RBNZ might lay ahead; “NZD: You can make the argument that since the RBNZ is missing on the inflation mandate but getting lambasted for juicing the housing market, foreign bond buying might be a nice way for them to ease in early 2021 without further stoking homebuyer animal spirits”. Such a move by the bank does not seem to be priced into NZD right now.

NZD/USD breaks bullish trend channel to the downside

NZD/USD has recently broken to the downside of a bullish trend channel, implying that further downside may lay ahead. For reference, to the upside, this bullish trend channel links the 16, 18 and 24 November and 2 and 3 December highs and to the downside, the bullish trend channel links the 13, 19, 23 and 30 November and 2 and 3 December lows.

NZD/USD four hour chart

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 


GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 


Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News