NZD/USD price reaches 5-week high amid U.S.-China optimism
The NZD has grown by 2.36%
NZD/USD pair has seen a significant uptick in price movement, rising sharply in the Asian session on Friday, January 24, to break above the psychological resistance at 0.5700, reaching a five-week high near 0.5720. This surge marks a weekly gain of 2.36%, the biggest since September 2024, and brings the year-to-date increase to over 2%.
The catalyst for this bullish movement in the NZD/USD pair can be directly attributed to recent comments by U.S. President Donald Trump. In an interview on Thursday, Trump suggested a potential deal with China could be reached without resorting to tariffs. He described his conversation with Chinese President Xi Jinping as "good" and "friendly," discussing various issues like TikTok, trade, and Taiwan.
This optimistic outlook has notably improved the appeal of the New Zealand Dollar (NZD), given New Zealand's role as one of China's leading trading partners.
The positive sentiment from Trump's statements has also led to a decrease in the risk premium of the U.S. dollar (USD), which has weakened to near 107.55, its lowest level in almost a month. This weakening of the USD against a basket of currencies has directly benefited the Kiwi pair.
NZD/USD price dynamics (October 2024-January 2025). Source: TradingView.
NZD/USD price outlook: 50-day EMA pose resistance to uptrend
Currently, in the European session, NZD/USD is approaching the 50-day Exponential Moving Average (EMA) at 0.5735, which might act as a resistance, potentially capping the current upward price movement. However, technical indicators remain supportive of further gains; the Relative Strength Index (RSI) has stayed in bullish territory without reaching overbought levels on both the 4-hour and daily timeframes, suggesting that the momentum could continue.
Therefore, the market will be keen to see if NZD/USD can sustain its upward trajectory beyond the 50-day EMA. The pair's performance will likely depend on further developments with the backdrop of the US-China trade relations and broader market sentiment towards risk,
Market uncertainties and focus on U.S.-China relations kept NZD/USD vulnerable. The U.S. dollar's appreciation, driven by expectations of a hawkish Fed, led to NZD/USD extending its losing streak.
