The New Zealand dollar dropped half a percent on Friday, falling to the 0.68 threshold, last seen in August 2021.

Late Thursday, the World Health Organization announced that it’s monitoring a new Covid-19 variant with “a large number of mutations,” detected mainly in southern Africa. Moreover, it could be resistant to vaccines. That led to an immediate sell-off in stocks, hitting commodity-linked currencies as well.

For now, the kiwi looks oversold and therefore it could be ready for a bounce. In that scenario, we might see a strong double bottom pattern, implying a reversal from the current bearish trend. 

The target in a potential relief rally should be at 0.6860 and if the price jumps above it, the short-term trend might change to bullish, possibly leading to another leg higher toward 0.6950.

Alternatively, if the NZDUSD pair drops below the 0.68 threshold, significant stop – losses of long positions will be hit, likely causing further bearish pressure, with a possible drop to 0.67 in the initial reaction. That would also represent new one-year lows for the New Zealand dollar.

NZDUSD daily chart 3:30 PM CET

About Author

Peter comes from a background in corporate finance which began in 2013 when he completed the Corporate Finance Program at the University of Economics in Bratislava. He’s been actively involved in the market sector since 2008 and got his hands-on experience in trading in 2011. His experience in finance and trading continues not only as a market analyst at Axiory Intelligence but also through his studies to obtain a degree in Capital Markets. The study is in line with MIFID II regulations and is under the supervision of the European Regulator ESMA, which strongly emphasizes ethics and morale in investing and working with a client.

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