The New Zealand dollar surged higher against the greenback to reach a fresh yearly high of 0.6631 following the rally in global equities, and the high-yielding currency may continue to appreciate against its major counterparts as market sentiment improves.
Currency Pair: NZD/USD
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The New Zealand dollar surged higher against the greenback to reach a fresh yearly high of 0.6631 following the rally in global equities, and the high-yielding currency may continue to appreciate against its major counterparts as market sentiment improves. After reaching a high of 0.7220 in August, the NZD/USD tumbled to a low of 0.4894 in March, driven by a surge in risk aversion however, the rebound in risk appetite paired with expectations for a global recovery may continue to push the exchange rate higher over the near-term as market participants move into higher risk/reward investments. At the same time, Credit Suisse overnight index swaps show investors anticipate the Reserve Bank of New Zealand to tighten policy over the next 12 months, and long-term expectations for higher interest rates could lead the kiwi-dollar to retrace the sell off from last August. Nevertheless, as the NZD/USD fails to break above 0.6720-30 (78.6% Fib), we could see the pair continue to hold a broad range going forward, and the pair may fall back towards the low-end of its range over the following week as the economic docket is expected to reinforce a weakening outlook for global trade. Over the next few hours of trading, we may see the kiwi-dollar continue to hold above the 120-SMA at 0.6540 however, as equity futures foreshadow a lower open for the U.S. market, falling stock prices are likely to hamper demands for the high-yielding currency. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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