- Rallies in tandem with risk on US tariffs implementation on China.
- Will the rebound last? Markets could turn risk-averse ahead of China retaliation, US NFP.
The tariffs action by the US on China came as a little shock to the world markets, as it was long priced-in and hence, the risk sentiment improved, driving the higher-yielding NZD higher in tandem. The Asian equities took the US tariffs in stride, with the Nikkei 225 index rallying +1.30% while China indices also jumped +1% to +1.80%.
However, it remains to be seen if the spot can sustain the bounce above the 0.68 level, as markets still remain jittery, in anticipation of China’s retaliation, which may trigger a risk-off mode in the session ahead. Also, a stronger US jobs report could offer some impetus to the USD bulls, capping the upside in the Kiwi.
NZD/USD Technical Levels
According to Ross Burland, Analyst at FXStreet, “0.6680 is the key support while 0.6850 is the first key upside target on a continuation of the reversal through the 200-hr SMA at 0.6785 where the price is holding above. Only a break above 0.6850 would alleviate the downside pressures and eyes remains towards 0.6675. On the wide, while below the key 200-month moving average resistance at 0.7007 longer term technicals remain bearish.”