The New Zealand dollar has resumed its upswing on Thursday. NZD/USD is trading at 0.6757 in the North American session, up 0.94% on the day. The pair hit a daily of 0.6762, its highest level since September 21st.
US election triggers strong volatility from NZ dollar
It has been an excellent week for NZD/USD, which has recorded gains of 2.20 per cent. The rally started on Tuesday, when the currency jumped 0.95 per cent on the day. The sharp upturn resulted due to the US election, as market movement was fueled by projections of a blue tidal wave, in which the Democrats would capture the presidency and both houses of Congress. This led to a buy-all frenzy, which saw the New Zealand dollar and other commodity-based currencies post sharp gains at the expense of the greenback. Reality hit on Wednesday when the markets realized that not only was the election race much tighter than forecast, it was actually too close to call. This led to sharp volatility from NZD/USD on Wednesday, although the pair ended the day unchanged. With Joe Biden expected to eke out a narrow victory and claim the White House, the US dollar selloff has resumed and NZD/USD has posted sharp gains.
Getting away from the US election and back to fundamentals, New Zealand releases key Inflation Expectations early on Friday (2:00 GMT). This is an important inflation gauge since expectations of future inflation often translate into actual inflation figures. The indicator rose to 1.43% in the second quarter and a higher reading would point to stronger economic activity, which could boost the New Zealand dollar. Conversely, a weaker reading would likely put downward pressure on the currency.
- NZD/USD is testing resistance at 0.6759. This is followed by resistance lines at 0.6816 and 0.6888
- We find support at 0.6628. Below, there is support at 0.6556
- The 50-day MA line remains relevant. It is currently situated below the pair
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