The NZDUSD pair soared by more than 1.35% today, making the kiwi one of the best-performing currencies in the developed world. Let us look at the key reasons why the New Zealand is soaring today.
Overall US dollar weakness
The US dollar is relatively weak against key currencies today. The US dollar index, which tracks the USD against a basket of currencies, declined by more than 60 basis points today. It dropped by 0.45% against the Swedish krona, 0.73% against the Canadian dollar, and by more than 1.15% against the British pound.
Part of the reason for this is that most investors are moving from the US dollar as other countries reopen. That is because they moved to the dollar at the height of the financial crisis.
New Zealand has won against coronavirus
The NZDUSD also rose because New Zealand is one of the few countries that has won its battle against the coronavirus pandemic. According to the government, no new case has been reported in the past few days.
New Zealand was praised for its handing of the crisis, which involved a strict lockdown and mass testing. Therefore, by winning this war, analysts believe that the country will continue to attract millions of dollars, especially from Asians.
Positive data
Earlier today, we received the trade numbers for the month of April. The data showed that the country’s imports declined by 22% to $4 billion while exports declined by 4% to $5.3 billion. That led to a $1.3 billion surplus, the biggest on record.
While these numbers were bad, they were expected, considering that the country was in lockdown in April. Also, they send a picture that the country’s economy has bottomed, meaning that it will only rise going forward.
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NZDUSD technical outlook
The NZDUSD pair is trading at an intraday high of 0.6500 today, which was the highest it has been since March 12. On the daily chart, the price also crossed the important 100-day exponential moving average and is slightly below the 61.8% Fibonacci retracement level at 0.6260. Therefore, this trend means that bulls have prevailed, which means that the pair will likely continue rising.
On the flip side, a move below 0.6085 will invalidate this trend. This price is along the 50-day EMA and is slightly below the 50% retracement level.
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