Search ForexCrunch
  • Risk-aversion remains the main market theme on Monday.
  • American investors enjoy the Columbus Day holiday.
  • US Dollar Index stays in green slightly below 96.

The NZD/USD pair slipped to its lowest level in more than 30 months at 0.6423 during the early trading hours of the Asian session and struggled to make a meaningful recovery throughout the day. As trading volume thins out due to the U.S. holiday in the NA session, the pair stays in a tight range below 0.6450 and was last seen trading at 0.6440, where it was virtually unchanged on a daily basis.  

Earlier today, the risk-off mood weighed on commodities and commodity-sensitive currencies such as the NZD, AUD, and the CAD. Moreover, rising tensions over the conflict between China and the U.S. put additional weight on the NZD’s shoulders due to New Zealand’s economic ties to China. Following his meeting with Chinese diplomat Wang, Mike Pompeo, the U.S. Secretary of States, that the U.S. had a fundamental disagreement and “great concerns” about China’s action.

Meanwhile, the strong demand for the  greenback  on Monday lifted the US Dollar Index back toward the 96 mark to make it even more difficult for the kiwi to retrace its downside. At the moment, the DXY is up 0.24% on the day at 95.90.

There won’t be any macroeconomic data releases from New Zealand on Tuesday and the dollar’s market valuation is likely to stay as the primary driver of the pair’s movements.

Technical levels to consider

The pair could face the first support at 0.6420 (daily low) ahead of 0.6390 (Jan. 19, 2016, low) and 0.6345 (Jan. 20, 2016, low). On the upside, resistances are located at 0.6455 (daily high), 0.6500 (psychological level) and 0.6590 (50-DMA).