NZD : Bullish Pressure

(Thu, 31 Dec 2020). The upbeat mood is likely an extension of sentiment over the recently passed U.S. Covid relief bill that includes $600 direct payments to eligible Americans. These funds were set to begin disbursing as early as yesterday evening, according to the Treasury Department. The agency also said paper checks are already being sent out, and direct deposits will continue into next week.

That said, prospects for increased stimulus checks of $2,000 appear to be fading despite supportive calls from President Donald Trump after Senate Majority Leader Mitch McConnell stated that “no realistic path” exists for a standalone bill. Instead, Senate Republicans appear focused on moving one forward that also contain provisions over election security and a repeal of Section 230, which has little chance of making it to the President’s desk with the Democrat-controlled House.

NZD/USD TECHNICAL OUTLOOK:

Despite the thinly traded tape across equities and Covid-19 concerns, the risk-sensitive New Zealand Dollar pushed higher into fresh multi-year highs versus the ailing Greenback. The path higher appears likely to continue into 2021 with NZD/USD’s breach above the psychologically important 0.7200 level signaling a decisive bullish victory.

Moreover, the MACD oscillator crossed over its signal line, a bullish sign that indicates increased momentum. The Relative Strength Index (RSI) is moving higher, although the oscillator still sits under the 70 overbought level. Expansion in the Bollinger Band indicator is also giving way to price action breaking above its upper band, signaling strong upside momentum. The aforementioned 0.7200 level will also likely underpin any moves to the downside.

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