- Remains depressed amid persistent US-China trade concerns.
- A modest pickup in the USD collaborates to the latest downtick.
- The downside remains limited ahead of this week’s key event risks.
The NZD/USD pair failed to capitalize on its intraday uptick and dropped to 1-1/2 week lows in the last hour, with bears now eyeing a follow-through weakness below the 0.6400 handle.
Traders look to US-China trade/pickup in USD demand
The pair remained on the defensive and traded with a negative bias for the second consecutive session on Monday amid persistent uncertainty over a possible resolution to the prolonged US-China trade disputes – especially after the US President Donald Trump’s comments that he was not ready yet to make a trade deal with China.
This coupled with a modest pickup in the US Dollar demand during the early European session further collaborated to the pair’s latest leg of a sudden drop of around 15-20 pips, albeit the prevalent risk-on mood seemed to be one of the key factors that might extend some support to the perceived riskier currency – Kiwi.
The downtick, however, remained limited as investors seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of Wednesday’s important release of the latest FOMC meeting minutes, which will be followed by the Fed Chair Jerome Powell’s scheduled speech at Jackson Hole Symposium on Friday.
In the meantime, the incoming trade-related headlines, along with the USD price dynamics and the broader market risk sentiment might play an important role in influencing the pair’s momentum amid absent relevant market-moving US economic releases on the first day of a new trading week.
Technical levels to watch
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