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  • NZD/USD edged lower on Monday amid a generally softer tone around the equity markets.
  • Dovish Fed expectations, sliding US bond yields weighed on the USD and helped limit losses.

The NZD/USD pair remained depressed through the early European session and was last seen hovering near the lower end of its daily trading range, just above the 0.7200 mark.

The pair witnessed some fresh selling on the first day of a new trading week and eroded a part of Friday’s strong positive move, snapping two consecutive days of the winning streak. The downtick was sponsored by a generally softer risk tone, which tends to drive flows away from the perceived riskier kiwi.

Worries about the continuous surge in new coronavirus cases in Asia, along with a further escalation of the Israel-Palestine conflict weighed on investors’ sentiment. The negative factor, to some extent, was offset by the prevalent bearish sentiment surrounding the US dollar, which helped limit losses for the NZD/USD pair.

The USD was being weighed down by Friday’s disappointing US Retail Sales data, which reaffirmed the Fed’s dovish view and forced investors to trim their bets for an earlier than anticipated tightening. This, along with the ongoing decline in the US Treasury bond yields, further acted as a headwind for the greenback.

There isn’t any major market-moving economic data due for release from the US on Monday. Hence, it will be prudent to wait for some follow-through selling below the 0.7200 mark before positioning for any further intraday depreciating move.

Technical levels to watch

 

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