Currencies have been a volatile so far over lower interest rate environment and economic meltdown on account of the COVID-19 outbreak. However, since the beginning of the March 2020 quarter many currency pairs have provided investors with superior returns over a plunge in the value of U.S. dollar and the local currency gaining strength.
Aussie Dollar Vs U.S. Dollar
Since the onset of the March 2020 quarter, the Aussie dollar has gained considerable momentum in the market with monetary measures along with the stimulus provided by the government propelling the domestic economy, leading to a surge in the home currency value against the U.S. dollar. Australia containing COVID-19 outbreak better than other developed nations has also aided the AUD.
The Aussie dollar has gained ~ 39.98 per cent against the U.S. dollar with the currency surging from USD 0.5507 (low in March 2020) to the present high of USD 0.7709 (as on 31 December 2020).
AUD Weekly Chart (Source: Refinitiv Eikon Thomson Reuters)
On following the weekly chart, it could be seen that the Aussie dollar has been in a medium-term uptrend while moving in a converging channel. The currency has given a volatility breakout with prices crossing the +2 Standard Deviation of the 20-day simple Bollinger Band®.
If the pair could maintain the present volatility break and confirm the same in successive week, it might seed bullish sentiments, prompting the currency to test the upper line of the converging channel, which is also overlapping with the long-term resistance level of USD 0.8141.
On the support counter, the lower line of the converging channel could act as immediate support, which is also overlapping with the mean of the Bollinger Band®; thus, is confirmatory in nature. Therefore, a break and price action below the same could seed bearish sentiments.
Kiwi Dollar Vs U.S. Dollar
Just like the Aussie dollar, kiwi dollar had also gained some ground against USD with the appointment of New Cabinet minister for economic growth and quantitative easing supporting the prospect of economic growth. Further, the country being able to contain COVID-19 spread has also added to the NZD’s strength.
To Know More, Do Read: Kiwi Dollar Reclaims USD 0.7000 Mark, What’s Bolstering the Home Currency?
NZD Weekly Chart (Source: Refinitiv Eikon Thomson Reuters)
On following the weekly chart, it could be seen that the currency is moving in a medium-term uptrend. The kiwi dollar had witnessed a volatility breakout and was able to sustain the same, which is now seeding bullish sentiments.
The currency breached its long-term resistance at USD 0.6722 and is now testing the upper range of the converging channel, which could now act as immediate resistance. A break and price action above the same with some degree of confirmation might propel the currency to test its major resistance at USD 0.7558.
The previous resistance at USD 0.67722, which is also overlapping with the downward sloping trendline might act as immediate support. Also, the same level is overlapping with the mean value of the simple Bollinger Band®; thus, could be confirmatory in nature.
Euro Vs U.S. Dollar
After almost trading equivalent to the U.S. dollar at USD 1.0637 in March 2020, euro has gained momentum with the currency recently jolting a high of USD 1.2310 (as on 31 December 2020).
EUR Weekly Chart (Source: Refinitiv Eikon Thomson Reuters)
On following the weekly chart, it could be seen that the currency has given a volatility breakout; and, if it sustains the same, it could further seed bullish sentiments, propelling euro to test the resistance line of a broadening inverse triangle like formation.
The major support for the currency is at the bottom line of the irregular pattern, which is overlapping with the mean value of the Bollinger Band®; thus, could be confirmatory in nature.
Therefore, a break and price action below the same could seed bearish sentiments ahead.
It should also be noticed that all three pairs are gaining ground over falling U.S. dollar, and technical indicators are in tandem with price behaviour, confirming bullish sentiments around these pairs.