NZD / USD with modest losses, remains below 0.7000 level

  • The NZD / USD is witnessing some new selling and returns some of the good recovery movement on Friday.
  • A softer risk tone benefits the safe-haven USD and weighs on the higher perceived risk NZD.
  • The technical setup favors the bears and supports the prospects for further short-term weakness.

The pair NZD / USD remains under pressure during the European session on Monday, staying near the lower end of its daily trading range around the 0.6975 region.

The pair has struggled to capitalize on the previous day’s good bounce of over 50 pips from the four-month highs has faced rejection near the key psychological level of 0.7000. The futures of the US stock indices have started the new week with a pessimistic tone, which has boosted some safe haven money flows to the US dollar and has weighed on the higher perceived risk NZD.

The dollar has been seen supported by upbeat US economic outlook, bolstered by impressive coronavirus vaccination pace and passage of massive stimulus package. To add to optimism, on Thursday US President Joe Biden made an ambitious promise to administer 200 million vaccine injections in his first 100 days in office.

Speculation about an additional $ 3 trillion infrastructure plan has further supported the prospects for a relatively faster US economic recovery from the pandemic. This occurs after The New Zealand government announced last week a series of measures to cool down the housing market and relieve pressure on the RBNZ to raise rates.

This has been seen as another factor weighing on the New Zealand dollar and supports the prospects for a further short-term bearish move for the NZD / USD pair. Therefore, a subsequent pullback towards challenging multi-month lows, around the 0.6945-40 region, seems like a clear possibility amid the absence of relevant economic releases in the market.

NZD / USD technical levels

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