NZD/USD upward momentum remains strong, pointing to a test of the June peak of 0.8137 this week. Fed tapering fears are likely to recede further this week – US data surprises continue to be negative, this week’s US GDP report has downside risks, and the FOMC may characterise the data flow as mixed – pushing the US dollar lower, and in turn, NZD/USD higher.
In addition, the RBNZ’s hawkish shift in stance last week should underpin NZ interest rates. Also, speculative NZD/USD futures positioning is short and therefore vulnerable to a short squeeze . Technical momentum remains positive and targets the 0.8135-0.8300 area. Price action during this month-old rally looks corrective, suggesting a resumption of the downtrend to the low 0.70’s by year end is likely.
Read the full report: FX Research
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