NZD has been putting on a strong performance over the last two weeks as the currency recovered from the aftermath of the latest RBNZ meeting. The decision to postpone a rate hike on the back of a three-day snap lockdown after one case of Covid-19 was discovered in Auckland the day before was of great detriment to the kiwi which dropped over 3% against the US dollar, breaking a key support area that had been holding for months.
But the pair has fully reversed those losses, albeit at a slower pace than it fell, and is about to break above its recent resistance range (0.7048 – 0.7093) for the first time since July 6th. That time it turned out to be a false breakout, so buyers will need to be careful about holding on above 0.71 if bullish momentum is expected to hold in the long run. In close proximity, the 200-day SMA is converging (0.7118) and so bulls may have a tough time consolidating any further gains, with a corrective pullback likely at some point.
If the price holds above 0.71, the rise to 0.72 shouldn't be that hard as momentum builds. But once there, I would expect some strong conflicting pressures that will keep the pair volatile around 0.72, following what we saw back in April and May. The RSI is still building towards 70, so there is still potential for a break higher. But I would be surprised if the 0.73 mark is touched anytime soon as resistance is likely to form along the way.
