NZD/USD bears the burden of DXY strength around mid-0.7100s

• NZD/USD teases Monday’s low amid failure to keep the bounce off 0.7153.
• US dollar benefits from downbeat data, market frenzy and chatters over US stimulus.
• Traders in Auckland return from long weekend without any major data/events.
• RBA, risk news become the key for fresh impulse.

NZD/USD struggles to mark another recovery wave from 0.7150-55 area during the initial Asian session on Tuesday. The Kiwi pair began the week’s trading around the same level before rising 0.7204 and the following U-turn to revisit the mid-0.7100 area the previous day.

While traders were in Auckland were cheering a local holiday, global markets portrayed notable moves amid a battle between the retail clients and hedge funds, backed by chatters over the social media platforms. Following the stellar move by equities during the last week, this time it was silver which gained 11% due to the market frenzy.

Other than the retail rush that favored the US dollar, the downbeat performance of the European economics and mixed statistics from America, coupled with the on-going stimulus talks between US President Joe Biden and Republicans also helped the greenback. That said, the US dollar index (DXY) jumped to the highest since December 10, 2020, by the end of Monday’s Trading.

It should be noted that the recovery in the coronavirus (COVID-19) conditions, ex-Australian, coupled with a jump in the vaccinations, favor the risks even as market imperfection challenges the mood.

Against this backdrop, Wall Street benchmarks closed with positive performance while the US 10-year Treasury yields drop 2.2 basis points (bps) to 1.077% by press time.

Given the on-going stimulus talks in the White House, NZD/USD traders are likely to pay major attention to the relief package news wherein the bulls may look for a confirmation of the $1.9 trillion bundle of aid. Also important will be the monetary policy meeting of the Reserve Bank of Australia (RBA), due to Australia’s trade ties with New Zealand. Herein, a confirmation of downbeat inflation prospects may weigh on the kiwi pair.

It’s worth mentioning that the global markets have been sensitive to social media chatters and hence any hints from the same could also move the NZD/USD pair, which in turn makes them the key to watch.

Technical analysis

Sustained trading below 21-day SMA, currently around 0.7192, directs NZD/USD towards breaking an ascending support line from December 21, 2020, at 0.7146 now, a break of which will attack 50-day SMA level of 0.7133 for further downside. Meanwhile, a one-month-old resistance line near 0.7225 adds to the upside filters.