NZD/USD Price Forecast: Extends rally to near 0.5900 after recovering from 20-day EMA
NZD/USD jumps to near 0.5900 as the New Zealand Dollar outperforms amid the risk-on mood.The US and Iran are expected to confirm the second round of talks before April 21.Investors await the US PPI data for March, which is scheduled at 12:30 GMT.The NZD/USD pair trades 0.5% higher to near 0.5900 during the European trading session on Tuesday. The Kiwi pair strengthens as the New Zealand Dollar (NZD) outperforms its peers amid risk-on market sentiment.
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the US Dollar.
USD EUR GBP JPY CAD AUD NZD CHF USD -0.35% -0.46% -0.41% -0.30% -0.40% -0.54% -0.45% EUR 0.35% -0.10% -0.06% 0.05% -0.05% -0.21% -0.12% GBP 0.46% 0.10% 0.04% 0.17% 0.05% -0.07% -0.01% JPY 0.41% 0.06% -0.04% 0.13% 0.02% -0.12% -0.04% CAD 0.30% -0.05% -0.17% -0.13% -0.11% -0.23% -0.16% AUD 0.40% 0.05% -0.05% -0.02% 0.11% -0.14% -0.02% NZD 0.54% 0.21% 0.07% 0.12% 0.23% 0.14% 0.08% CHF 0.45% 0.12% 0.00% 0.04% 0.16% 0.02% -0.08%The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
S&P 500 futures jump to near 6,900 in the European trade, reflecting an upbeat market mood. The demand for risk-perceived assets remains firm amid growing expectations that the United States (US) and Iran could hold the second round of talks before the expiration of the two-week ceasefire on April 21.
Steady prospects of a US-Iran permanent ceasefire have diminished the safe-haven demand of the US Dollar (USD). As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% lower to near 98.00, the lowest level seen in over six weeks.
Meanwhile, investors await the US Producer Price Index (PPI) data for March, which will be published at 12:30 GMT. The data is expected to show that the headline producer inflation accelerated to 4.6% Year-on-Year (YoY) from 3.4% in February
NZD/USD technical analysis
NZD/USD trades higher at around 0.5900 at the press time. The pair reflects a bullish near-term tone as spot holds above the 20-period Exponential Moving Average (EMA) at 0.5817. Also, it extends the rally above the 50% Fibonacci (Fibo) retracement at 0.5888.
The 14-day Relative Strength Index (RSI) at 58.3 is advancing but not yet overbought, which suggests buyers retain control while still leaving room for further upside before conditions become stretched.
On the topside, immediate resistance is aligned at the 61.8% Fibonacci retracement at 0.5936, followed by the 78.6% retracement at 0.6005. On the downside, initial support is seen just under the market at the 50% retracement at 0.5888, ahead of a confluence zone between the 38.2% level at 0.5839 and the 20-period EMA at 0.5817; a deeper pullback could expose the 23.6% retracement at 0.5779 before the broader bullish structure would be questioned closer to 0.5683.
(The technical analysis of this story was written with the help of an AI tool.)
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
What are the key assets to track to understand risk sentiment dynamics?Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
Which currencies strengthen when sentiment is "risk-on"?The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
Which currencies strengthen when sentiment is "risk-off"?The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
