The price broke the massive monthly trend line during sell off in March and now we see a retest of that trend line at a strong resistance zone at 0.62. New Zealand was highly effective in its response the pandemic and a pullback of the stock market created a risk on environment for the currency to bounce back. The FED printed trillions of dollars and fear of USD deflation due to oversupply weakened the USD.
Current level shows consolidation as we wait for potential break of the trend line and resistance to the upside to test the monthly downtrend line in case the risk-on scenario maintains. Or potential bearish continuation, but that would imply fundamental shift to risk off.
This chart shows the May performance of FX pairs, showing clear risk on mood the past month. NZDUSD gained 1.17%, while USD pairs showed weakness against risk on currencies.
Riots in USA are becoming more heated as 41 million unemployed people take to the streets for lack of job or proper support from the government, as the White House mostly cares about big corporations’ stock value and not the average citizen. This could further impact the USD.