NZD/USD forecast as New Zealand eases Covid restrictions

The NZD/USD price is hovering near its highest level since June as New Zealand’s Covid situation makes some modest improvement. The pair is trading at 0.7130, which is slightly below last Friday’s high of 0.7170.

New Zealand starts reopening

The New Zealand dollar declined sharply in August after New Zealand recorded its first Covid-19 case in six months. This case interrupted the strong recovery the country had experienced in the past few months. It also pushed the country’s central bank to avoid a scheduled rate increase during the month.

The kiwi’s sharp decline was only temporary as the currency rebounded against the US dollar. Indeed, it has risen by almost 5% from its lowest level in August. This drop was mostly because of the general weakness of the US dollar. 

Indeed, the rally accelerated on Friday after the mixed US non-farm payrolls (NFP) data. The numbers revealed that the American economy added 235k jobs while the unemployment rate declined to 5.2% while wages rose by 4.3%. 

The NZD/USD is also holding steady after New Zealand started abandoning its lockdown as the number of daily cases declined. In a statement on Monday, the government said that areas outside Auckland will move to level 2 of the lockdown. Auckland will remain in level 2 lockdown until next week. 

The announcement, by Jacinda Arden, came as the country reported just 20 cases on Monday. This was slightly below last week’s high of more than 80. This is a sign that the country’s Covid response is heading in the right decision. At the same time, New Zealand is ramping up its vaccination process. 

The next key mover for the NZD/USD pair this week will be New Zealand’s electronic retail sales numbers that will come out on Friday. Analysts expect these numbers to show that sales declined modestly in August.

NZD/USD forecast

The four-hour chart shows that the NZD/USD pair has been in a bullish trend recently. It rose to 0.7170 last Friday. Along the way, the pair moved above the key resistance level at 0.7090, which was the highest level on August 4. 

The pair has also moved above the short and longer-term moving averages. It is also slightly between the upper and middle line of the Bollinger Bands. Therefore, the NZD/USD will remain in a bullish trend so long as it is above the two moving averages.