NZD/USD: On the back foot above 0.6600, awaits fresh clues
- NZD/USD stays pressured near two-week high flashed late last week.
- US President Donald Trump’s health recovery, hopes of stimulus favor risk-on mood.
- New Zealand government’s update on COVID-19 alerts becomes immediate catalyst.
- China’s off highlights risk news, US ISM Services PMI will be the key during North American session.
NZD/USD struggles to keep the bounce off the intraday low of 0.6632 around 0.6640 during Monday’s Asian session. The kiwi pair began the week on a negative side as the US dollar remains on the front foot despite improving coronavirus (COVID-19) conditions of US President Donald Trump. The reason could be traced from downbeat virus updates from elsewhere as well as the market’s wait for the alert level announcements at home.
Cautious optimism challenges NZD/USD traders…
US President Trump’s short drive outside Walter Reed and an upbeat video helped S&P 500 Futures to kick-start the week on a positive side. Though, fears of harsh virus-led activity restrictions in New York, England, France and Ireland keep the market players directed towards the US dollar.
It’s worth mentioning that hopes of the COVID-19 stimulus from America have recently gained momentum after US House Speaker Nancy Pelosi and Majority Leader Mitch McConnell spoke positively of the much-awaited aid package. Also favoring the optimists was the headline the US President Trump and Treasury Secretary Steve Mnuchin talked over the stimulus during the weekend.
Furthermore, virus updates suggesting that there have been no fresh community cases in New Zealand during the last week should have ideally favored the pair but couldn’t due to the greenback’s up-moves.
Additionally, New Zealand’s ANZ Commodity Price for September, expected 0.0% versus -1.0% prior (revised), slipped to -0.2% but failed to gain any accolades.
Amid all these plays, S&P 500 Futures add 0.60% as markets await Tokyo open.
Looking forward, risk factors, mainly emanating from the US, will be important to watch for near-term direction amid off in China and regional holidays in Australia. However, any surprises from the New Zealand government, concerning alert levels, will be followed closely for immediate moves.
Technical analysis
21-day SMA near 0.6645 offers immediate resistance to the pair ahead of the early August month’s top near 0.6690. On the contrary, the pair’s current trading momentum seems to drag it towards 0.6595 support comprising 10-day SMA.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
