- Summary:
- The NZD/USD rally is gaining steam as the risk-off sentiment continues in the financial market. But a closer look reveals that bearish signs are emerging
The NZD/USD is rising today even as New Zealand’s current account moves back to the deficit zone. The pair has jumped to the highest level in more than 2½ years and is one of the best-performing pairs in the market.
What happened: The New Zealand statistics bureau released the quarterly current account data earlier today. The numbers showed that the current account moved back to the deficit zone in the third quarter as the amount of import rose. In total, the deficit rose to $0.4 billion mostly because of a sharp increase in automobile imports.
What next? As a currency major, the NZD/USD will next react to the Fed interest rate decision that will come during the American session. This decision will come as the number of Covid cases in the US continues to rise and as the country starts vaccinations.
It will also come as the country still battles with the lack of stimulus from congress. The decision also meets the dollar at the lowest level in more than 2 years.
Therefore, the Fed could turn dovish, which will push the NZD/USD pair higher. Alternatively, the bank could also boost its economic forecast, which will be a good thing for the dollar.
NZD/USD technical outlook
What next for NZD/USD? The NZDUSD is trading at 0.7100, which is the highest it has been in 2½ years. On the daily chart, we see that the pair is being supported by the short and medium-term moving averages.
Also, the stochastic oscillator and the Relative Strength Index (RSI) have started to flatten above the overbought level. This means that, in the near term, the pair could continue rising but we can’t rule out a bearish reversal.
NZDUSD technical chart
