NZD/USD : Overbought Territory

(Wed, 6 Jan 2021). NZD/USDclears the 2020 high (0.7241) on the back of US Dollar weakness, and the exchange rate may continue to exhibit a bullish behavior as the Relative Strength Index (RSI) flirts with overbought territory.

NZD/USD CLEARS 2020 HIGH TO PUSH RSI TOWARDS OVERBOUGHT TERRITORY

Key market trends may keep NZD/USD afloat as the US Dollar still reflects an inverse relationship with investor confidence, and swings in risk appetite may continue to sway the exchange rate as long as the Federal Reserve remains committed to increasing its “holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.”

In turn, the recent pullback in the Fed’s balance sheet may end up being short lived as the latest update showed the figure narrowing to $7.363 trillion in the week of December 28 from a record high of $7.404 trillion the week prior, and the ongoing response to the COVID-19 pandemic is likely to keep key market trends in place as monetary authorities become increasingly reliant on their non-standard tools to achieve their policy targets.

With that said, key market trends may keep NZD/USD afloat as the US Dollar still reflects an inverse relationship with investor confidence, and the exchange rate may continue to exhibit a bullish behavior as the Relative Strength Index (RSI) flirts with overbought territory.

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