Forex News

Upward momentum gathers pace after trendline breakout

  • Tuesday’s trendline breakout is boding well for the NZD/USD pair. 
  • The Kiwi is solidly bid despite the talk of negative rates in New Zealand. 
  • The pair could challenge recent highs near 0.6130.

The New Zealand dollar continues to gain ground in Asia despite the talk of negative rates in New Zealand and pushing the NZD/USD pair higher. 

At press time, the currency pair is trading at session highs near 0.6092, representing a 0.59% gain on the day.

The Kiwi breached the trendline April 14 and April 20 lows on Tuesday, marking an end of the pullback from 0.6130 and a resumption of the upward move from lows under 0.55 printed in March. 

The breakout also validated the higher low at 0.5910 created on April 23 and shifted risk in favor of a re-test of 0.6130 (April 14 high). 

Westpac and Capital Economics said on Tuesday that the Reserve Bank of New Zealand may cut interest rates to negative territory in November, strengthening the offered tone around the Kiwi. The NZD/USD pair fell to 0.60 during the Asian trading hours only to bounce back and end the day above the trendline hurdle. 

BNZ, however, thinks the central bank is unlikely to implement negative rates before the second quarter of 2021. 

The NZD/USD’s short-term outlook would turn bearish under 0.5992, the low of the long-tailed candle created on Tuesday. 

Daily chart

Trend: Bullish

Technical levels

 

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