Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

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.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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