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  • NZD/USD questions the recent U-turn from 0.6300 amid mixed clues concerning coronavirus.
  • China, WHO and the US are flashing upbeat signals while global players like Mastercard and United Airlines keep traders worried.
  • A lack of major data/events will keep coronavirus headlines on the driver’s seat.

NZD/USD keeps it between 0.6333 and 0.6343, currently around 0.6340, while marking no major changes during the early Asian session on Tuesday. Despite the week-start gap down, mainly due to coronavirus fears, the kiwi pair has been on recovery mode amid positive signals from China. However, the buyers are waiting for fresh clues to extend the pullback from the lowest in four months.

With the next RBNZ meeting be in May, upbeat signals from China and the World Health Organization (WHO) seem to push the NZD/USD buyers towards expecting further recoveries in the Chinese epidemic. On Monday, many of the Chinese provinces lowered down emergency levels while also citing fewer cases of the coronavirus (COVID-19) infections and deaths. Further, the WHO also contributed to the upbeat expectations while tweeting that the deadly virus peaked between late-January and early February. It should also be noted that the latest comments from the US President and the Federal Reserve Cleveland President Loretta Mester also downsized the contagion risk.

On the other hand, Italian PM Conte warned of a strong impact of the coronavirus on the economy while Mastercard and United Airlines were the latest in the league of pessimists.

The market’s risk-tone remains mostly negative as coronavirus spread outside China, recently in Oman, seems to threaten the trade sentiment. While portraying the same, the US equity benchmarks nosedived and the US treasury yields also dropped heavily by the end of their trading on Monday. At present, the S&P 500 Futures recovers 0.28% to 3,236 versus the previous declines of more than 3.0%.

On Monday, New Zealand PM Jacinda Ardern extended travel ban from China for another eight days while the fourth quarter (Q4) Retail Sales slipped below 1.7% prior to 0.7%.

Traders will now look for fresh clues to determine near-term direction amid an absence of major data/events at home. In doing so, coronavirus will be their go for search.

Technical Analysis

A confluence of 10-day SMA and a downward sloping trend line from January 24, around 0.6390 seems to restrict the pair’s near-term recoveries. On the downside, a sustained break below 0.6300 could challenge October 16, 2019, low surrounding 0.6240.