NZD/USD edges down to 0.6935 after hitting long-term highs at 0.6950

The New Zealand dollar is pulling back on Friday’s late trading after having posted a fresh 23-month high at 0.6950. The pair has pulled back to 0.6935 area, still 0.36% up on the day and on track to complete a three-week rally.

Kiwi advances in a risk-on market

The risk-sensitive kiwi has resumed its uptrend on Friday, buoyed by the positive market sentiment as the investors shifted their focus from the surging COVID-19 cases the promising news about the progress of the vaccines.

Pharmaceutical giant Pfizer announced earlier today a plan to request emergency-use authorization for their vaccine in the US, an important milestone that has triggered hopes that the cure for the pandemic could be available by late December or beginning of January.

Vaccine news and market speculation about the resumption of talks between the Democrats and the Republicans to pass a coronavirus stimulus package in the US have boosted market optimism, weighing on the safe-haven greenback. The USD Index dipped to test 10-day lows at 92.15 before picking up during the US trading hours and turn positive on the day.

NZD/USD: An eventual breakout of 0.6945 is on the cards – Credit Suisse

According to the Credit Suisse FX Analysis Team, the risk is on the upside and further rally beyond 0.6950 should not be discarded: “Beyond 0.6945 would see the December 2018 high at 0.6970 next, where we would expect to see another pause. Removal of here in due course should subsequently see an acceleration of upside momentum, up to the June 2018 high at 0.7054/60 and eventually 0.7111/58.”

Technical levels to watch