“¢ Consolidates last week’s dovish RBNZ-led led slump to 2-1/2 year lows.
“¢ The USD bullish run pauses and extends some support, for now.
“¢ Weaker commodities fail to assist in registering any meaningful recovery.
The NZD/USD pair extended its consolidative price action and remained confined in a narrow trading band, below the 0.6600 handle, or closer to 30-month lows touched earlier today.
The pair continues to be weighed down by last week’s dovish RBNZ stance, reaffirming that the OCR could stay at the current level through 2019 and into 2020 – longer than projected in the May monetary policy statement.
This coupled with a strong follow-through US Dollar buying interest, supported by the ongoing currency crisis in Turkey, further drove flows away from perceived riskier currencies – like the Kiwi and dragged the pair to an intraday low level of 0.6562, the lowest since Feb. 2016.
The USD bullish momentum now seems to have paused a bit, for the time being, and was seen lending some support, albeit was largely negated by the prevalent negative trading sentiment around commodity space and eventually led to a subdued price action through the mid-European session.
In absence of any major market moving economic releases from the US, the pair remains at the mercy of broader market risk sentiment and the USD price dynamics ahead of Chinese macro data, scheduled during the early Asian session on Tuesday.
Technical levels to watch
A follow-through selling below 0.6560 area (session low) is likely to accelerate the fall towards the key 0.6500 psychological mark before the pair eventually drops to 0.6445-40 support area. On the flip side, the 0.6600 handle, closely followed by the 0.6620-25 region now seems to act as an immediate hurdle, above which a bout of short-covering could lift the pair towards 0.6655-60 supply zone en-route the 0.6700 round figure mark.
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