NZD / USD Drops Below 0.7100 Again, Slashes Daily Gains As USD Finds Bottom

• The US dollar has rebounded from recent trading lows, which has hit the NZD / USD.
• The pair has fallen back below the 0.7100 level and is now trading flat on the day near 0.7080.

He NZD / USD It rose to fresh multi-year highs at 0.7120 on Monday, but has reversed below 0.7100 to 0.7080 in recent trading amid a broad recovery in the US dollar from lows that have seen the dollar index rebound from 90.40 to 0.9080. As it stands, the NZD / USD is trading practically flat on the day.

NZD adjusts to USD dynamics

Amid the lack of New Zealand or other fundamental drivers of the note coming from Australia, the NZD is trading largely against the USD on Monday. Therefore, the pair initially pushed up to year-to-date highs as the USD fell to year-to-year lows on vaccine optimism (the US FDA approved the Pfizer vaccine over the weekend ) and the hopes of Brexit (the talks were not interrupted over the weekend and continue).

However, amid what initially appeared to be a profit-taking in USD, but was later compounded by a series of background news on the Covid-19 front, including 1) the UK Health Secretary, Matt Hancock, announcing that London will return to Level 3 lockdown and a new, more virulent strain of Covid-19 is spreading in the UK capital and 2) New York City Mayor de Blasio said it is possible that the city should return to full lockdown amid the continued increase in cases in the city.

This news duo seemed to weigh a bit on global equities, which have fallen from previous highs, and commodity markets (crude oil markets are now in the red) and thus likely contributed to the USD resurgence. , particularly against the higher beta G10 coins. like NZD.

Looking ahead to the kiwi dollar, there are some data points that will be worth looking at this week. First at 21:00 GMT on Monday is the launch of the Westpac Consumer Sentiment survey for the fourth quarter. Then the current account numbers for the third quarter will be released at 9:45 PM on Tuesday, followed by this week’s most important release, the third quarter GDP numbers at 10:45 PM on Wednesday. The November trading numbers released at 9:45 PM on Thursday will be the final key data worth watching. However, as always, USD dynamics and global market risk appetite are likely to be the dominant factors in determining NZD / USD price action.

NZD / USD is trading at the bottom of the short-term range

NZD / USD losses have come to a halt as the pair bottoms out of a short-term intraday range that was in play for most of last Friday. The bottom of this range comes into play as support at 0.7070. If the USD continues to gain ground, as it might, the next significant support area for the NZD / USD is just above the psychological level of 0.7000, which the pair has refused to go below since it broke through in late November.

1 hour chart