A shift in client sentiment may moderate NZD/USD gains

The recent NZD/USD rally remains in place, but further gains may be tempered as resistance nears and sentiment adjusts.

New Zealand dollar sentiment, price and analysis

  • The New Zealand dollar has pulled back nearly all of this year’s losses against the US dollar.
  • A change in client positioning may moderate further gains.

The New Zealand dollar has pulled back nearly all of this year’s losses against the US dollar and the pair now near a multi-month high which may suggest further gains ahead. Recent changes in trader sentiment data, however, may slow down any move higher.

NZD/USD IG client sentiment

IG client sentiment data shows that 38.83% of retail traders are net long on NZD/USD with the ratio of traders short to long at 1.58 to one.

We typically take a contrarian view to crowd sentiment and the fact that traders are net short suggests that NZD/USD prices may continue to rise. However, positioning is less net short than yesterday, but more net short from last week and the combination of current sentiment and recent changes gives us a further mixed NZD/USD trading bias.

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NZD/USD daily chart

The daily chart shows that NZD/USD is starting to build a sideways trend with support and resistance around $0.6400 and $0.6600 respectively.

The pair now trade above all three moving averages and have made higher highs all this week. A clean break and consolidation above resistance may leave the 31 December high at $0.6756 vulnerable in the medium term. The cluster of recent lows either side of $0.6400 should provide support against any short-term sell-off.

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