NZD/USD bears look for clear directions to firm the grip below 0.6000

With the mixed clues from the US troubling kiwi traders, NZD/USD struggles for direction around 0.5955 during the early Asian session on Wednesday.

While the passage of $484 billion package by the US Senate and readiness of the 20 US states to reopen seems to pave the way for the risk reset, temporary ban on the US immigration and failures of the coronavirus (COVID-19) drug seems to challenge the tone. Further, downbeat figures of New Zealand’s GDT Price Index, -4.2% versus +1.5% forecast and +1.2% prior, also weighed on the trade sentiment.

Also on the plus side were upbeat comments from the US Treasury Secretary Steve Mnuchin and White House COVID-19 respondent Deborah Leah Birx.

The NZD/USD prices dropped heavily on Tuesday after the RBNZ Governor Adrian Orr cited the odds of monetizing the fiscal deficit. The losses were also taking clues from the broad US dollar strength backed by the risk-off sentiment due to the oil price slump.

The market’s risk-tone remains mildly positive amid all these catalysts. While portraying the same, the US 10-year Treasury yields mark one basis point (bp) of gains to 0.58% after declining to six bps the previous day whereas S&P 500 Futures also rise 0.30% to 2,740 by the press time.

Considering the lack of major data from either the US or New Zealand, traders will keep eyes on the virus updates and oil price performance, coupled with the US actions to combat the pandemic, for near-term direction.

Technical analysis

Given the NZD/USD pair’s first daily close below 21-day SMA in two weeks, sellers may target the monthly low near 0.5840 during the further downside. However, 0.5920 may offer an intermediate halt. On the contrary, 21-day and 50-day SMAs, respectively around 0.5985 and 0.6100, can keep the pair’s short-term upside capped.