- NZD/USD heading lower in the descending channel while US-Chinese trade tensions weigh.
- A deeper support comes as 0.6760 and resistance is located at 0.6860.
NZD/USD has dropped a further 10 pips to challenge the support of the 4th July lows down at 0.6750 and a few pips below the descending support line of the 9th and 10th of July, extending the downside of the NY session’s surge in the greenback.
NZD/USD has been pressured by the US-Chinese trade tensions that have stepped up a notch, pressuring the commodity sector.
“Stretched positioning or not, the NZD is going to face plenty of challenges if trade tensions persist (which it looks like they will). It is sitting near short-term downside support,” analysts at ANZ Bank New Zealand Limited explained.
US data underpins dollar’s upside
In terms of US data, the numbers stacked up positively for the greenback while US PPI came in firmer than expected in June ahead of CPI tomorrow. (Final demand PPI was up 3.4% y/y, compared with 3.1% y/y expected). Analysts at Nomura are expecting June’s headline CPI to rise by 0.2% (0.212%) m-o-m, pushing up its 12- month change to 2.9% (2.94%) from 2.80% previously (Consensus: 0.2% m-o-m, 2.9% y-o-y).
A deeper support comes as 0.6760 and resistance is located at 0.6860 (21-D SMA 0.6859). On a correction, 0.6780 is where the 10-D SMA is located on the upside where the descending trend line is located. 0.6920 is a line in the sand, that if broken, puts the bulls back in control and the June highs will be up for grabs. However, bulls really need to get above the 200-month moving average resistance at 0.7007.