Home NZD/USD stays on the back foot around 0.6650 as risk-off keeps USD strong
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NZD/USD stays on the back foot around 0.6650 as risk-off keeps USD strong

  • NZD/USD declines to weekly low amid US-Iran tension.
  • Iran begins taking revenge for the killing of key military personnel, the US President says will quickly and fully strike back.
  • US-China phase-one deal prospects are high but phase-two talks seem to be tough.

NZD/USD drops to 0.6654 at the start of the week’s Asian trading session. The kiwi pair has been under pressure since the beginning of 2020 wherein the US dollar (USD) is mainly gaining over the US-Iran tussle off-late.

The nearness to signing in of US-China phase-one and upbeat data from Beijing have mostly pleased the kiwi buyers by the end of 2019. However, the happy times couldn’t last long as the New Year kick-started with consolidation. The downturn gained support from the USD’s safe-haven appeal during the US-Iran fight after the Washing-led drones killed key military figures from Iran and Iraq in Baghdad.

The greenback’s mild pullback on Friday, mainly due to the decade low ISM Manufacturing PMI, couldn’t disappoint the USD buyers. The reason being weekend headlines that suggest the escalation of the geopolitical risks emanating from the US and the Middle East. Among them, Iran’s missile attack in Kenya and near green zone in Baghdad, as well as the US President Donald Trump’s response, grab the spotlight.

Moving on, there are no major data/events from New Zealand and hence the USD moves will mostly grab the traders’ attention. Though, second-tier data from Australia and China, like Commonwealth Bank PMI and Caixin Services PMI respectively, can offer intermediate directions.

Given the current times of tension, markets will keep a check on the political headlines more than the economic calendar that does not carry key data/events for the day. The same could generate a positive environment for USD buyers.

Technical Analysis

21-day SMA level of 0.6520 offers immediate support to the pair ahead of December 18 low near 0.6550 and 200-day SMA, near 0.6340. On the upside, prices need to stay strong beyond 0.6700 to regain buyers’ confidence.

 

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