NZD/USD rally stalls below 0.6040

• NZD/USD rallies beyond 2% on the day to hit resistance at 0.6040.
• The kiwi surges on mild risk appetite and a softer US dollar.
• FX exerts at Westpac warn about NZD's response to macro data over the coming months.

The New Zealand dollar’s has staged a solid recovery on Thursday, bouncing at 0.5910 low to appreciate more than 2% to peak at 0.6040. The NZD/USD has been fuelled by positive market sentiment, with the investors welcoming the rebound on oil prices and the main stock indexes posting moderate advances.

The bright market sentiment weighs on the USD

The NZD has been favoured by a somewhat softer dollar today. The greenback has been weighed by the recovery on risk appetite and the downbeat US PMI and unemployment figures. In this backdrop, the New Zealand Dollar has found the strength to retrace Wednesday’s decline and reach two-day highs at 0.6040.

The kiwi, however, lost steam during the US session, as risk appetite faltered. The pair pulled back from 0.6040 to consolidate above 0.6000 so far.

NZD/USD giving signs of breaking lower - Westpac

In a longer-term perspective, the FX analysts at Westpac warn about New Zealand dollar's response to macroeconomic data over the next months “We expect the hard economic data released over the next few months to reflect NZ’s lockdown which is more severe than for most other countries. NZD/USD is showing early signs of breaking lower, a sustained break below 0.5920 then signalling 0.5700.”

NZD/USD key levels to watch