NZD/USD hits a session high of 0.6338
The pair is continuing to push higher on the week in spite of risk aversion in the market as we see short covering action continue with the dollar also falling as a result of the meltdown in Treasury yields over the past few days.
Buyers are maintaining a more bullish near-term bias by defending the 200-hour MA (blue line) yesterday and leaning on the near-term trendline support today before pushing price to its highest level since 25 February.
Right now, there is minor resistance around 0.6334 and 0.6650-60 but there is little else in the way of a further retracement higher towards 0.6400 after:
It has been a bit of an interesting conundrum for the kiwi as traders also have to factor in the RBNZ policy meeting on 25 December.
A 25 bps rate cut is a done deal after the Fed proceed with the emergency cut earlier this week, bu the market is now pricing in 70% odds of a 50 bps rate cut as well.
However, all that could still change if the Fed does cut further at its 18 March policy meeting; Fed funds futures now showing a 50 bps rate cut is fully priced in.
For now, there is scope for further short covering until the near-term picture starts to change back in favour of sellers once again. But in the bigger picture, it is hard to see the kiwi rallying too strongly so long as the RBNZ continues to follow the Fed into cutting rates.
