- The NZD / USD witnesses some new selling on Tuesday and returns the gains of the previous day.
- Pessimistic market sentiment benefits the safe haven USD and weighs on the NZD.
The pair NZD / USD has moved lower during the Asian session on Tuesday and has returned the previous day’s earnings. At the time of writing, the pair remains near the lower end of its daily trading range, around the region of 0.7175.
Disappointing German data on Monday fueled concerns on the possible economic consequences of the imposition of strict restrictions due to the coronavirus and clouded the market sentiment. Further, persistent concerns about potential obstacles to the $ 1.9 trillion stimulus plan from the President of the United States, Joe Biden, further affected global risk sentiment.
Apart of this, escalating tensions between the United States and China It further soured investors’ appetite for perceived riskier assets. It is worth reporting that a group of US aircraft carriers arrived in the South China Sea over the weekend. China has not been happy with this move and announced that it will hold military exercises in the South China Sea this week.
This, in turn, has led to a modest pullback in equity markets, forcing investors to take refuge in the safe-haven US dollar. This, in turn, has been seen as one of the key factors that have pushed cash flows away from the perceived riskier NZD and prompted some selling around the NZD / USD pair during the early part of Tuesday’s trading action.
Despite the slide, the NZD / USD pair has remained within a three-day trading range, as investors now seem reluctant to position aggressively ahead of this week’s key event. The FOMC will announce its monetary policy decision on Wednesday. This will be followed on Thursday by the release of the preliminary US fourth quarter GDP report.
This, coupled with the news about the US stimulus, will influence USD price dynamics and could generate further directional momentum to the NZD / USD pair. Meanwhile, developments around the coronavirus saga will play a dominant role in broader market risk sentiment.
NZD / USD technical levels
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