Bottom line: NZDUSD medium term outlook continues to remain bullish until prices stay above 0.5470 levels. Bulls are still looking poised to push towards 0.6450 levels, to take out immediate resistance. We can expect a meaningful pullback thereafter.

Fundamental Outlook:

NZDUSD had rallied over +1.5% on Tuesday and managed to close high at 0.6228, along with its counterpart AUDUSD. Even though risk assets managed to rally, NZDUSD could not capitalize and remained flat, closing below 0.6200 mark. It would be interesting to see how the currency would react over Reserve Bank of New Zealand’s continued dovish forward guidance.

SPX500’s party continues for now as the indice closed higher at 3036 yesterday, a +1.5% rise. Futures are trading almost flat around 3040, as we write this article. Investors should remain cautious though, since Equity Markets may witness a significant drop over several mounting issues: COVID-19 effect on economic slowdown, escalating US-China tensions, fear of infections rising as economies re-open post lock down.

USDJPY may come under pressure again as the US Dollar continues to drop against its peers. The US Dollar Index had dropped to 98.72 before pulling back yesterday. USDJPY remains vulnerable to further drop towards 105.00 levels.

Technical Analysis:

NZDUSD remains in control of bulls as it prints highs around 0.6232 levels yesterday. We are witnessing a pullback since then, but NZDUSD should remain well supported ahead of 0.6100 handle. Bulls are determined to remain in control and push through initial resistance seen at 0.6450 levels.

NZDUSD had dropped to 0.5470 lows in March 2020 and since then bulls have managed to carve a series of higher highs and higher lows. Immediate support is seen towards 0.6080 levels and a break lower may test 0.6040/50 levels before turning higher again.

NZDUSD is strongly supported around 0.5920 levels and until prices stay above that, all corrective drops might be seen as opportunities to go long. Most traders might be preparing to initiate fresh long positions around 0.6140/50 levels, with a protective stop below 0.5900 and potential targets around 0.6450 respectively.

Prepared by

Harsh Japee, Technical Analyst.

NZDUSD Chart

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