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  • NZD/USD sellers catch a breather after four-day losing streak.
  • New Zealand Manufacturing Sales eased in Q4, ANZ Business Confidence, Activity Outlook eyed.
  • Risks wobble, commodities remain heavy as US Treasury yields favor US dollar bulls.
  • US fiscal stimulus progress in the House will be the key risk catalyst to watch.

NZD/USD offers a swift 20-pip drop reaction to please bears with 0.7120 figures during the early Asian session on Tuesday. While downbeat New Zealand (NZ) Manufacturing Sales for the fourth-quarter (Q4) recently weighed on the quote, broad US dollar strength and a lack of major positives at home depressed the kiwi buyers during the previous four days.

NZ Manufacturing dropped below 17.3% prior to 0.5% during Q4. Although the NZD/USD prices responded with immediate losses, the bears catch a breather afterward as New Zealand’s economy hasn’t seen drastic moves from manufacturing to services during the coronavirus (COVID-19) times and hence the data was expected to arrive as softer.

Even so, NZD/USD bears are keeping the reins as the US dollar pokes late November 2020 tops amid the surging US Treasury yields. The bond bears are cheering the hopes of further fund inflows and propel the greenback while also challenging the equities and commodities even as American policymakers inch closer to the passage of the much-awaited $1.9 trillion fiscal stimulus.

Challenges for the kiwi also come from the US-China tussles, recently over Taiwan, as well as downbeat commodity prices.

Against this backdrop, US 10-year Treasury yields regain 1.60% level with a 4.9 basis points (bps) jump but Wall Street benchmarks dwindle by the end of Monday’s North American session.

Looking forward, Australian and New Zealand Banking Group’s (ANZ) preliminary readings of the Business Confidence and Activity Outlook for March, previous 7.0% and 21.3% respectively, will be the immediate catalyst to watch. However, major attention will be given to the US covid relief aid package which is up for final voting in the House on Tuesday.

Technical analysis

A clear downside break of a yearly support line, now resistance, currently directs NZD/USD towards the 2021 bottom surrounding 0.7100-0.7095. However, any further declines will be tested by a 100-day SMA level of 0.7072. Meanwhile, recovery moves beyond the stated resistance line, at 0.7205 now, needs to cross 50-day SMA, currently around 0.7215 to validate an extra rise.