NZD/USD erases previous losses and stalls again below 0.5870

The kiwi loses steam after hitting resistance at 0.5870.
The US dollar picks up after a two-day sell-off.
NZD/USD should extend beyond 0.5880 to gain bullish traction – UOB.

The New Zealand dollar has managed to regain lost ground after bouncing from 0.5790 earlier on Thursday, but the pair is struggling to find acceptance above 0.5870 and remains little changed on the daily chart.

Kiwi’s rally loses steam with the USD picking up

A better-than-expected US Gross Domestic Product report contributed to easing negative pressure on the US dollar on Thursday. According to data released by the Commerce Department, the US economy expanded at an unexpected 4.6% pace in the third quarter, putting an end to two consecutive negative quarters and calming recession fears.

The moderately positive USD tone is posing headwinds to the kiwi, which had rallied about 2.5% over the past two days amid broad-based USD weakness as the investors start to price in a certain softening in the Fed’s monetary tightening cycle

The USD Index, which measures the value of the dollar against a basket of the most traded currencies, is trading about 0.6%, back above the 110.00 level following a nearly 2% reversal over the last two days.

NZD/USD: Above 0.5880 further sustained appreciation is likely – UOB

FX analysts at UOB point out that a successful move above 0.5880 might trigger further appreciation: “Despite the rapid rise, upward momentum has not improved by much. That said, NZD could rise, but it has to close above 0.5880 before a further sustained advance is likely. Looking ahead, the next resistance is at 0.5920. Support is at 0.5770, but only a break of 0.5740 would indicate that NZD is not strengthening further.”