NZD/USD rebounds swiftly from 11-year lows, lacks follow-through
- NZD/USD witnessed some aggressive selling during the Asian session on Thursday.
- The downward spiral in the global financial markets weighed heavily on the kiwi.
- A rush to hoard cash benefitted the USD and contributed to the bearish pressure.
The NZD/USD pair has managed to recover a major part of its early slump to 11-year lows, albeit struggled to extend the momentum further beyond the 0.5700 mark.
The pair took another plunged during the Asian session on Thursday amid the ongoing panic selling across the global financial markets, which exerted some heavy pressure on perceived riskier currencies, including the kiwi.
Investors have been selling almost everything amid nervousness over the economic fallout from the coronavirus pandemic. The already weaker sentiment deteriorated further in the wake of a selloff in industrial metals on Chinese exchanges.
This coupled with a rush to hoard cash continued boosting the US dollar's status as the global reserve currency and further contributed to the pair's steep slide of nearly 300 pips to intraday lows, around the 0.5470 region.
However, extremely oversold conditions on short/medium-term charts helped ease the bearish pressure and led to a goodish intraday recovery. Apart from some intraday short-covering, the uptick lacked any positive catalyst and thus, lacked any strong follow-through.
It will now be interesting to see if the pair is able to attract any buying interest or continues with its recent bearish trajectory as the focus remains on the incoming coronavirus-related headlines, which might continue to infuse volatility in the FX market.
Technical levels to watch