NZD/USD consolidates in 0.6875 area after impressive, dollar weakness driven two-day run higher from under 0.6800


  • NZD/USD is consolidating in the 0.6875 area on Thursday, having cleared key resistance over the past two sessions.
  • Dollar weakness since Wednesday has sent NZD/USD surging from below 0.6800 and opened the door to a longer-term run higher.

NZD/USD’s impressive rally since the start of the week continued on Thursday, though has in recent hours petered out in the 0.6875 area, with the bulls unable to force a test of the 0.6900 level. On the day, the pair trades about 0.4% higher, taking its on the week gains to about 1.5%, the best week for the pair since early October. Broad dollar weakness that on Thursday saw the dollar index drop to fresh two-month lows underneath the 95.00 level has been the principal driver of NZD/USD’s recent turnaround higher. Dollar weakness, which traders have said is being driven by a long-squeeze/bout of profit-taking, goes against recent fundamental developments that many would normally see as USD bullish.

Since last week’s hawkish Fed minutes release, which showed FOMC members were broadly on board with the idea of significant removal of monetary accommodation in 2022, the December unemployment rate was shown to have dropped under 4.0% and December inflation increased. Wednesday saw the release of the December Consumer Price Index which rose at a pace of 7.0% YoY, the highest since 1982, whilst the Producer Price Inflation report on Thursday showed factory-gate price growth reaching 9.7% YoY. The recent run of US data strongly supports the Fed’s new hawkish position that interest rates should be lifted this year and (perhaps) quantitative tightening kicked off.

Various Fed members have spoken public so far this week and all are on board with the notion that accommodation should be quite swiftly removed this year, with most also open to the idea of lift-off in March. Some have said they could support four rate hikes this year if warranted and this seems to now be the base case expectation of most major US banks and analysts. All of the above (hawkish Fed, strong jobs data, hot inflation) might typically be expected to boost the buck, but the opposite has occurred. Some FX strategists have argued the dollar weakness will be short-lived, while others have said it reflects concerns that the Fed might make a policy mistake by tightening too quickly and then having to postpone hike (meaning a lower terminal rate) at a later date.

If the latter camp is correct, NZD/USD recent rally to the upper 0.6800s may prove short-lived. But from a technical perspective, it is impressive how the pair has managed in the last two sessions to break above key levels of resistance. After breaking out of a short-term bearish trend channel on Wednesday that was holding it under 0.6800, NZD/USD has since rallied to multi-week highs above a key level of long-term support turned resistance in the 0.6860 area, as well as clearing the 50-day moving average at 0.6861. The recent bullish run suggests a medium-term change in trajectory for NZD/USD, with the door now open to a move into the 0.6900s and perhaps even a test of the big 0.7000 level.

NZD/Usd

Overview
Today last price 0.6872
Today Daily Change 0.0016
Today Daily Change % 0.23
Today daily open 0.6856
 
Trends
Daily SMA20 0.6795
Daily SMA50 0.6866
Daily SMA100 0.6962
Daily SMA200 0.7025
 
Levels
Previous Daily High 0.6858
Previous Daily Low 0.6773
Previous Weekly High 0.6857
Previous Weekly Low 0.6733
Previous Monthly High 0.6891
Previous Monthly Low 0.6701
Daily Fibonacci 38.2% 0.6825
Daily Fibonacci 61.8% 0.6805
Daily Pivot Point S1 0.68
Daily Pivot Point S2 0.6744
Daily Pivot Point S3 0.6715
Daily Pivot Point R1 0.6885
Daily Pivot Point R2 0.6914
Daily Pivot Point R3 0.697

 

 

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD drops towards 1.0150 amid risk-aversion, ahead of US data

EUR/USD drops towards 1.0150 amid risk-aversion, ahead of US data

EUR/USD turns south after rejection at 1.0200 as risk-off flows dominate. US dollar finds demand, despite weaker yields and cautious Fed minutes. The euro looks vulnerable amid the deepening EU energy crisis and growth risks.

EUR/USD News

GBP/USD: Bears tighten grips on the way to 1.1930

GBP/USD: Bears tighten grips on the way to 1.1930

GBP/USD extends the previous day’s pullback from 21-DMA as MACD teases bears. Weekly low holds the key to further downside towards May’s bottom. Previous resistance line from April appears a tough nut to crack for bears. Two-month-old resistance line, 100-DMA adds to the upside filters.

GBP/USD News

Gold eyes a daily close below 21 DMA for further downside Premium

Gold eyes a daily close below 21 DMA for further downside

Gold price is fading the early bounce this Thursday, as the US dollar is seeing renewed buying interest amid the extension of risk-off flows. Dire Chinese economic outlook combined with Fed’s caution on a potential downturn keep investors on the edge.

Gold News

Shiba Inu price to provide another opportunity before a 50% upswing

Shiba Inu price to provide another opportunity before a 50% upswing

Shiba Inu price is on the verge of triggering another run-up, but it needs to allow investors who partook in the previous rally to book profits. As a result, more market participants are likely to flock around the next support level, triggering another leg-up.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures