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NZD/USD: Squeeze higher on crowded shorts, Fonterra

FXStreet (Bali) - NZD/USD rate exchanges hands within a compressed 20 pips range between 0.8380 and 0.8360-65 during thin markets, with the downtrend context still intact, despite some upside momentum was noted in the last 24h.

NZD/USD saw solid demand off 0.83+ lows following news that Fonterra expanded its business further into China by creating an infant formula partnership with local food producer Beingmate Group, a joint venture expected to contribute significantly to improved growth prospects in the New Zealand economy in the years to come.

After the news, and given the rather crowded short positions after consistent declines, NZD bids emerged until faced with 0.8380 early NY, so far proving formidable parallel resistance intraday. A resolution of the current tight range is now needed, with a break above 0.8380 paving the way for 0.84-8405 exposure, where solid offers should be touted. On the contrary, breaking below 0.8360 would represent an intraday boost of confidence for sellers, likely to target 0.8345-50, with a breach lower allowing 0.8330 ahead of 0.8310-8300.

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