NZD/USD: Bears target 0.7000 ahead of US ISM, NZ GDT
- NZD free fall to continue amid broad USD strength,
- Technical setup points to further declines ahead on MonPol divergence.
The NZD/USD pair extends its yesterday’s sell-off into Asia, now flirting with the key support area near 0.7030 (68.1% Fib retracement level), as the bears look to test the psychological levels of 0.7000 any time soon.
Despite the latest decline, the pair remains confined within its overnight 15-pips narrow range, as the dust settles after yesterday’s 0.80% slump amid resurgent US dollar demand across the board.
The greenback continues to hammer the Kiwi dollar, as the buck manages to keep the upper hand amid divergent monetary policy outlooks between the Fed and Kiwi, which is well displayed by the widening US-NZ 10-year yield differential. The Fed remains on track to hike rates as soon as next month on better US economic prospects while the Reserve Bank of New Zealand (RBNZ) is likely to stand pat this year.
The spot also fails to benefit from positive oil prices and upbeat remarks from the NZ Finance Minister Robertson, as the sentiment continues to be driven by the USD dynamics, with the focus now shifting towards the US ISM manufacturing PMI and NZ GDT price index for fresh trading impetus.
NZD/USD levels to watch
FXStreet’s Analyst, Ross Burland noted: “Despite last week's closing bull hammer on the daily sticks, technically, there is a bearish bias now that a new low has been set accompanied with the RSIs biased to the downside as well. Support is at 0.6880 and resistance is at 0.7180.”