NZD/USD’s bulls are capped at 0.5740, returns to 0.5700 area
- The New Zealand dollar fails at 0.5740 and reruns to 0.5700.
- The kiwi trims losses as risk appetite fades.
- NZD/USD: Upside attempts to be capped below 0.5755 – UOB.
The New Zealand dollar is struggling to find acceptance above 0.5700 as the pair’s rebound from 0.5620 was capped at 0.5740 on Thursday’s US trading session. The pair remains positive on the daily chart although bullish momentum seems to have faded.
The kiwi appreciated on risk appetite
The negative price action observed during Thursday’s Asian session gave way to a solid recovery as the market sentiment improved during the European session. The positive reaction to the news of UK Prime Minister Liz Truss's resignation has weighed on the safe-haven USD, pushing the pair to levels past 0.5700.
Risk trade, however, has weakened through the US session as the enthusiasm about Truss's departure fades and the market acknowledges the ongoing political uncertainty in the UK. Equity markets have retreated from session highs and the USD regains lost ground, sending the sentiment-linked kiwi back to previous ranges.
NZD/USD seen limited below 0.5750 – UOB
Analysts at UOB are skeptical about a relevant NZD recovery in the near-term: “We highlighted yesterday that NZD ‘could rise above 0.5725 but a sustained advance above this level still appears unlikely (…) Our update from two days ago (18 Oct, spot at 0.5675) still stands. As highlighted, NZD appears to have moved into a consolidation phase and is likely to trade between 0.5570 and 0.5755 for the time being.”
Technical levels to watch