NZD/USD loses momentum ahead of 0.68, sticks to modest daily gains

• Upbeat Chinese data boosts the demand for AUD and NZD on Monday.
• US data helps the DXY retrace a small portion of daily losses.

The NZD/USD pair started the week on a positive note and recovered a part of last week’s losses as the strong macroeconomic data releases from China helped the NZD gather strength. After touching a daily high at 0.6793, the pair lost its traction in the early NA session and was last seen trading at 0.6780, where it was still up 0.2% on the day.  

The real-GDP worth in China, New Zealand’s biggest trading partner, came in at 1.8% on a quarterly basis in the second quarter following first quarter’s 1.4% and surpassed the market expectation of 1.6%. Furthermore, retail sales expanded by 9% on a yearly basis in June following May’s 8.5%.

In the second half of the day, the US Dollar Index, which edged down to 94.15 on Monday, found some buying interest following the data releases from the United States and rose to 94.30, where it was still down 0.15% on the day. The U.S. Census Bureau today reported that retail sales in June increased by 0.5% to $508.6 billion to match the market consensus. The Empire State Manufacturing Index, meanwhile, eased to 22.6 in July from 25 in June but surpassed the experts’ estimate of 22.

Technical outlook

The RSI indicator on the daily chart rose toward the 50 mark, suggesting that the bearish momentum is losing strength. On the upside, the initial resistance for the pair aligns at 0.6795/0.6800 (daily high/20-DMA/psychological level), 0.6855 (Jul. 9 high) and 0.6895/0.6900 (50-DMA/psychological level). Supports could be seen at 0.6750 (Jul. 15 low), 0.6685 (Jul. 2 low) and 0.6600 (psychological level).