The New Zealand dollar surged to a fresh yearly high of 0.6900 against the greenback following the rebound in commodities, and the NZD/USD may continue to retrace the sell-off from the previous year as investors hold an improved outlook for global growth.
Currency Pair: NZD/USD
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The New Zealand dollar surged to a fresh yearly high of 0.6900 against the greenback following the rebound in commodities, and the NZD/USD may continue to retrace the sell-off from the previous year as investors hold an improved outlook for global growth. After reaching a high of 0.7471 at the end of July, the kiwi-dollar tumbled to a low of 0.4894 in March as traders curbed their appetite for higher risk/reward investments however, the rebound in market sentiment paired with long-term expectations for higher interest rates may drive the pair higher over the near-term as it remains well supported by the 20-Day moving average at 0.6766. Meanwhile, Credit Suisse overnight index swaps are up nearly 120bp in August as the Reserve Bank of New Zealand maintains a neutral policy stance and the rise in the interest rate outlook may lead the pair to break above 0.6920-30 (78.6% Fib) as investors anticipate the RBNZ to tighten policy over the next 12 months. Over the next few hours of trading, we may see the NZD/USD continue to push higher as investors raise their appetite for higher-yielding assets however, as the markets remain thin ahead of the weekend with the weekly advance stalling ahead of 0.6920-30 (78.6% Fib), we may see the pair fall back to fill-in the gap from the 120-Hour SMA at 0.6840. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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