- NZD closes six-day rally, retreating from 0.7215
- The USD rebounds, favored by a moderate aversion to risk.
- NZD / USD: The upside bias remains positive while above 0.7160 / 70.
The NZD / USD it is about to end a six-day rally against its US counterpart, weighed down by weaker sentiment. The pair has retreated from four-month lows at 0.7215 and is seeking support above the previous highs 0.7160 / 70.
Risk aversion weighs on kiwi
The NZD / USD is losing momentum due to the bitterest sentiment in the market on Thursday, as the optimism sparked by the optimistic earnings reports released earlier this week has faded. Wall Street is trading mixed following disappointing earnings data from tech firm IBM, which has rekindled concerns about supply chain disruptions.
Beyond that, current concerns about the Evergrande crisis in China spreading to the country’s real estate sector keep demand for the risk-sensitive kiwi in check. The threat of a deeper liquidity crisis continues to affect the sector; with news about the appearance of more defaults that are causing falls in the bonds of most of the companies in the sector.
NZD / USD: Test of support 0.7160 / 70 keeps positive bias intact
From a technical perspective, the pair remains strong while above 0.7160 / 70 (September 3-10 high). Below there, a further pullback below the 200-day SMA at the 0.7090 area would increase the negative pressure and could send the pair to test the psychological level at 0.7000.
On the upside, immediate resistance remains at 0.7220 (intraday high) and then 0.7240 (June 7 high), which would clear the way to 0.7315 (May 23 high).
Technical levels
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