The Kiwi bulls have step in this week as the dollar gives back some gains in a mid-session rally on Wall Street.
On Monday, the positive news of the ASEAN trade deal likely contributed to the bulls around the Kiwi and the other risk assets. Ten ASEAN nations: Vietnam, Thailand, the Philippines, Laos, Cambodia, Myanmar, Malaysia, Singapore, Indonesia, and Brunei, along with Australia, China, Japan, New Zealand, and South Korea entered into the world’s biggest free-trade agreement over the weekend that is likely to step up the economic recovery from the Covid-induced hold back.
Further in the US, the rising number of Covid-19 cases in the US and rising prospects of a new lockdown weighed over the risk sentiment, capping the Kiwi’s upside.
With additional fiscal aid, on and off the congressional back burner, traders are also looking to the US Federal Reserve for signs it could intervene with more monetary stimulus as record Covid-19 pandemic numbers are upsetting the world’s economy’s recovery.
Technically, you can see how the NZDUSD is encountering a lot of selling pressure near 0.6940 resistance levels. A close above 0.6940 would reduce the chances of a retraction, and open the gate to the 0.7160 level.
On the downside you’ll want to keep a very close eye on the 0.6800 area. A turn to 0.6800 would be the first test of the level as new support, and could offer a long opportunity. Further down, we are looking at the next support level at 0.6720.
Next week traders will be watching the quarterly Retails Sales and also the Trade Balance figures.
We remain bullish as long as NZDUSD stays above 0.6790, testing the psychological 0.7000 level.
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