- NZD / USD has started to retreat from the 0.7225-30 resistance zone despite upbeat New Zealand CPI figures.
- A pullback in the stock markets benefits the safe-haven USD and puts some pressure on the pair.
The pair NZD / USD is extending its retracement decline from weekly highs and remains under pressure near daily lows, about 0.7180, during the European session on Friday.
The pair has not benefited from higher than expected New Zealand CPI consumer inflation figures and has encountered new selling near the 0.7225-30 resistance zone amid a pullback in the stock markets. In fact, the headline CPI increased 0.5% during the fourth quarter of 2020 and increased 1.4% year-on-year, exceeding estimates.
Having said that, the imposition of a partial blockade on China’s capital Beijing has revived concerns of the market on the possible economic consequences of the increasing cases of coronavirus. This, in turn, has weighed on risk sentiment, leading to some profit taking and a modest pullback in stock markets.
This has been seen as one of the key factors that has offered some support to the safe-haven US dollar and has pushed money flows away from the NZD, of higher perceived risk. The NZD / USD pair, for now, appears to have stopped this week’s good rebound from levels below 0.7100 touched on Monday and remains at the mercy of USD price dynamics.
Therefore, the focus of attention will continue to be on events related to the coronavirus saga, which could continue to influence overall market risk sentiment and drive demand for the safe haven USD. Apart from this, investors will also keep an eye on the preliminary US PMI figures for January for a short-term trade boost at the start of the American session today.
NZD / USD technical levels
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