NZD/USD bears lurking at yearly lows amidst covid lockdown announcements

NZD/USD bears lurking at fresh support in the year's low.
All ears to the ground for covid lockdown extension announcement at 4pm today.

NZD/USD could face some additional pressures in the open on Monday as news circulates over the prospects of a worsening wave of coronavirus.

On Friday, NZD/USD closed at 0.6830 and up by some 0.1% as the US dollar gave back some ground with a rise in risk appetite on Wall Street.

The bird is now perched comfortably, for now, at the year’s lows.

'Our sentiments remain the same – longer term we are optimistic, but that’s conditional on beating Delta, and there could well be more bad news to digest over the coming few days and weeks,'' analysts at ANZ bank argued.

''So it’s a delicate balance. The path of the economy really does depend on Delta. As optimistic as one can be (given NZ went hard, early), markets will still take things one day at a time, especially given what they have seen in Australia, which tends to colour views on the Kiwi. With no data today, all eyes will be on the lockdown extension announcement at 4pm today.''

Meanwhile, case numbers could rise for another five days, says Associate Minister of Health Ayesha Verrall - and numbers today could be the highest we have seen so far.

''And hopes that some of New Zealand might be able to move out of a full lockdown early seem to be up in the air - Verrall says "tens of thousands" of Aucklanders left the region when the lockdown was announced, and that's a risk,'' the NZ Herald (NZH) wrote.

"I think [falling case numbers] could still be a wee way away - it could be another five days before we see the impact of the transmission that was happening in the community prior to lockdown pass through," Verrall told Newstalk ZB's Mike Hosking, as explained in the NZH article.

NZD/USD technical analysis

The price has met critical weekly support that might be expected to hold on to these first attempts leading to an upside correction to test old support prior to a downside continuation.

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