NZD/USD: Kiwi Finds a floor at Two-Year Low
After three days of losses, NZD/USD is on course to string together three consecutive daily gains. Although the price action has been lackluster, to say the least.
NZD/USD is inching higher on Tuesday as the rate continues to test the support offered by July’s two-year low of 0.6060.
The NZD/USD pair has spent the last three days in a tight 0.0060 trading range as it searches for direction. The downside, so far limited by the technical support. Whereas the US dollar strength is capping the upside.
The USD started this week firmly on the front foot, buoyed by safe-haven buying on the deepening European energy crisis. Citing an oil leak, Russian majority state-owned energy giant Gazprom shuttered the Nordstream1 pipeline that supplies Gas to western Europe on Sunday.
As a result, gas prices spiked sharply higher when energy markets opened Monday, sending the Euro below $0.99 and wobbling the British pound. Subsequently, the US dollar index jumped above 110.00, tagging a twenty-year high in the process.
Another factor behind the safe-haven US dollar buying is the reintroduction of covid lockdowns in China. The highly populated Shenzhen region has joined Chengdu, imposing restriction on it’s citizens. As such, over 65 million Chinese are subject to controls.
Considering the above, NZD/USD is holding up well. This is likely due to NZD buying around July’s multi-year low. However, it remains to be seen if it’s the start of a reversal in the kiwi’s fortunes, or just a brief respite before the dollar resumes it’s march higher.
US Dollar to Dollar Kiwi Forecast
The daily chart shows, NZD/USD is attempting to turn higher from the horizontal support at 0.6060. And as long as the pair remains above the support, bulsl may be encouraged to buy the NZD. In this event, an extension towards the 50-Day Moving Average at 0.6219 (green line) is possible. Furthermore, a daily close above the 50-DMA, brings the longer-term 100-DMA at 0.63189 (blue) into focus. Notably, the Relative Strength Index (RSI) is turning higher, supporting a bullish view.
However, a close below 0.6060 should illicit selling. Here, we look to the March 2020 pandemic low of 0.5480 as a possible target on the downside.
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