• NZD/USD has dropped back sharply in recent trade, falling under 0.6800 as the dollar broadly picked up.
  • The main drivers this week will be the key US December jobs report, as well as the December ISM surveys.

NZD/USD has stabilised in recent trade after pulling back sharply from Asia Pacific/early European session highs in the 0.6840 area to current levels in the 0.6780s. The 21-day moving average at 0.6786 seems to be offering some support where last week’s lows at 0.6790 failed. FX markets have been choppy and difficult to make sense of on Monday, with the dollar and yen seemingly gaining ground amid a safe-haven bid, but typically more risk-off resilient currencies like CHF and EUR suffering alongside the more risk-sensitive currencies like NZD, AUD and CAD.

Liquidity conditions remain thin/somewhat impaired amid the absence of many Asia Pacific and European market participants. Markets in the UK, Australia, New Zealand, Canada, Japan and China were all closed on Monday. A break below support around current levels for NZD/USD would likely signal continued drop back towards December lows around 0.6700. NZD/USD’s failure to break above trendline resistance last week in the mid-0.6800s seems to have been taken as a bearish signal. The main drivers of the pair and FX markets more broadly this week will be the key US December jobs report, as well as the December ISM surveys.

At current levels, NZD/USD’s Z-score to 200DMA is roughly -1.8, meaning it trades about 1.8 standard deviations below its 200DMA. As recently as mid-December, the pair’s Z-score was closer to -3.0. Looking back at the last five or so year, apart from during times when FX markets were undergoing violent repricing (such as during the March 2020 Covid-19 panic), a Z-score near or below -2.0 has been an indicator that conditions have become oversold and, at the very least, some consolidation lays ahead.

And consolidation has been just what NZD/USD has seen over the past few weeks. Whether this can continue into early 2022 is another question as the Fed primes itself for a potential rate hike as soon as March. NZD/USD’s Relative Strength Index score of close to 43 suggests there is plenty of room for some further selling pressure. But the RBNZ is ahead of the Fed when it comes to policy normalisation and looks set to extend its lead, a fact that seems to have e been neglected by FX markets as of late. Perhaps the NZD isn’t as vulnerable to the dollar’s advances as say the euro, yen and Swiss franc, central banks are decisively more dovish.

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 edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges slightly lower toward the 1.0850 area in the early European session on Monday as the cautious market mood helps the US Dollar hold its ground. Markets await business and consumer sentiment data from the Euro area and German growth figures.

EUR/USD News

GBP/USD stays on the back foot below 1.2400

GBP/USD stays on the back foot below 1.2400

GBP/USD came under modest bearish pressure and dropped below 1.2400 at the beginning of the week. The negative shift witnessed in risk mood helps the US Dollar find demand as a safe haven and makes it difficult for the pair to gain traction.

GBP/USD News

Gold shows resilience below 200-hour SMA, bulls have the upper hand

Gold shows resilience below 200-hour SMA, bulls have the upper hand

Gold price kicks off the new week on a subdued note and oscillates in a narrow trading band through the Asian session. The XAU/USD remains well within the striking distance of a nine-month peak touched last Thursday.

Gold News

Why Ethereum bears need to be cautious about shorting ETH before $2,000

Why Ethereum bears need to be cautious about shorting ETH before $2,000

Ethereum price has been consolidating after the January rally subsided after three weeks. This tightening continues even after BTC shot up 3% over the weekend. Therefore, a short-term spike in buying pressure should is likely. 

Read more

Big risk this week Fed hikes 50 points

Big risk this week Fed hikes 50 points

While the entire global investment community is apparently very excited about the US Fed slowing its rate increases to 25 bps, there are strong reasons for arguing why another 50 bps rate hike, or two, are still on the menu.

Read more

Forex MAJORS

Cryptocurrencies

Signatures