NZD / USD breaks below 0.7100 as market sentiment takes a 180 degree turn

• The NZD / USD hits a weekly low at 0.7082, amid a sudden shift in market sentiment.
• The dollar that ignores its losses faces most of the G8 currencies.
• New Zealand’s GDP is expected to hit 16.3% by the end of this week.
• Retail sales and initial jobless claims in the United States could weigh on the US dollar.

The NZD / USD advanced earlier in the day but has since trimmed some gains. The pair is trading at 0.7096, shedding 0.30%, having hit a weekly low before the close of the US session.

Market sentiment suddenly shifted into risk-off mode. Before the opening of the US stock market, the Bureau of Labor Statistics released US inflation figures.The Basic Consumer Price Index rose 4% versus the 4.3% forecast by economists, slowing down for the first time in six months. After the release, US stock indices rose, the dollar sold across the board, while the US 10-year yield plunged below 1.30%.

At the time of writing, the US dollar index is gaining 0.04% to 92.65 and is putting pressure on the NZD / USD pair and most G8 currencies except safe haven currencies like the yen. Japanese and the Swiss franc.

New Zealand GDP and US retail sales would be decisive catalysts for NZD / USD

Going back to NZD / USD, New Zealand’s economic docket did not have any high-impact data on Tuesday. Later in the week, in the Asian session on Thursday, the country’s GDP for the second quarter will be released, and it is expected to be 16.3% annually.

With respect to the US, retail sales data and initial jobless claims will be essential for the dollar. Good readings on Thursday could boost the US dollar and resume the recent NZD / USD downtrend. However, poor data coupled with softer inflation figures could weigh on the dollar, pushing the NZD / USD pair up to challenge the 0.7100 level.

TECHNICAL LEVELS