NZD/USD retreats from weekly tops, steadies around mid-0.60s
- Risk-on atmosphere helps kiwi find demand on Monday.
- US Dollar Index starts consolidating last week's gains.
- Dallas Fed Manufacturing Index drops to record low in April.
The positive market mood at the start of the week helped the risk-sensitive NZD find demand and helped the NZD/USD pair advance to its highest level in a week at 0.6076.
However, ahead of this week's key macroeconomic data releases and central bank announcements, the trading action turned subdued and the pair was has gone into a consolidation phase near 0.6050, where it was up 0.6% on a daily basis.
USD struggles to find demand on Monday
Renewed hopes of major economies inching closer to reopening amid some apparent signs of a slowdown in the pace of coronavirus contagions provided a boost to the market sentiment at the start of the week. Major Asian and European equity markets closed the day with strong gains and Wall Street's main indexes opened higher. Mirroring the risk-on atmosphere, the 10-year US Treasury bond yield rose sharply and now looks to end the day more than 9% higher.
Meanwhile, the only data from the US showed that the Dallas Fed Manufacturing Index slumped to a fresh all-time low of -73.7 in April from -70 in March but was largely ignored by the market participants. Nevertheless, the US Dollar Index retraced a portion of last week's gains and dropped to the 100 area to allow the pair to cling to its daily gains.
On Tuesday, Trade Balance data from the US and New Zealand will be looked upon for fresh impetus but the pair is likely to stay confined in a range ahead of the FOMC's policy announcements on Wednesday.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
