NZD/USD testing support at 0.7150 on rejection from 0.7195

The New Zealand dollar has given away previous gains after pulling back from 0.7195 on Tuesday, to test support at 0.7150. The pair has been moving without a clear direction in a choppy trading session, ahead of key central bank meetings this week.

The US dollar picks up on a risk-on session

The kiwi has been unable to take advantage of moderately positive market sentiment. Stock markets have posted gains on Tuesday on the back of better than expected quarterly earnings reports by UPS and General Electric.

The US Dollar Index has pared losses on Tuesday after a soft opening, extending Monday’s rebound from 93.45, to session highs at 94.00.

Better than expected US new home sales, which surged 14% in September to reach six-month highs with 800,000 units sold, plus the unexpected improvement in US consumer sentiment and the solid increase on the Richmond Fed Manufacturing Index might have offered a fresh boost to the USD during the American trading time.

Major currencies, however, have remained within previous levels, with the investors awaiting key monetary policy decisions by the ECB, BoJ and BoC, due to be released later this week, which might set the near-term direction for FX markets.

NZD/USD’s upside momentum loses vigor – UOB

The FX analysis team at UOB warns that the NZD is losing upside traction: “As highlighted, upward momentum is beginning to wane and a break of 0.7125 (no change in ‘strong support’ level) would indicate that the NZD strength that started more than a week ago has run its course. In order to rejuvenate the flagging momentum, NZD has to move and stay above 0.7180 within these 1 to 2 days, or a break of 0.7125 would not be surprising.” 

Technical levels to watch