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NZD/USD rises further and eyes 0.6700

1/4/2019, 11:01:46 AMMarket Analysis
NZD/USD rises further and eyes 0.6700

The NZD/USD pair continues to move higher after the “mini flash crash” that took place during the Asian session. Since the beginning of the US session, it gained more than 50 pips and rose to the 0.6700 area. 

On Asian hours, NZD/USD collapsed hitting levels under 0.6600, the lowest level in nine weeks; at the same time, AUD/USD reached the lowest since 2009 and AUD/NZD sunk multi-year lows, before bouncing back to the previous trading range. 

NZD/USD recently reached 0.6697 and as of writing trades at 0.6690/95, supported by a weaker US dollar across the board. The greenback lost strength amid a rally in US bonds. The 10-year yield dropped to 2.57%, the lowest since January. 

US labor market data surpassed expectations, but later, the ISM Manufacturing report added to global concerns. On Friday, data to be released includes the official employment report with non-farm payrolls (expected to rise by 177K), unemployment and income. 

While weaker US data might influence on Fed’s policy expectations, weakening the US dollar, the risk aversion environment across financial markets could limit any rally in currencies like NZD, AUD and EM. 

Levels to watch 

The technical outlook improved significantly with the bounce from 0.6600 and particularly after recovering 0.6650. The next target is seen at 0.6700. If the Kiwi rises above, the next key resistance is the 0.6720/25 area that capped the upside several days during the previous week: a break higher would open the doors to more gains. On the flip side, now 0.6680 is the immediate support followed by 0.6650 and 0.6630.