- The U.S. and Chinese tariffs on each other’s goods go into effect on Monday.
- US Dollar Index steadies in red near 94.
- Risk-off dominates the FX market action.
Despite the broad-based greenback weakness witnessed in the second half of the day, the NZD/USD pair struggles to retrace its early losses as the risk-off mood doesn’t allow the risk-sensitive kiwi to gather strength. As of writing, the pair was trading at 0.6657, losing 0.35% on the day.
The U.S. import tariffs on $200 billion worth of Chinese goods and China’s retaliatory tariffs on $60 billion worth of American goods both went into effect on Monday. Currencies of economies that rely heavily on trade with China, such as the AUD and the NZD, came under pressure today and recorded losses against their rivals. Furthermore, global major equity indexes reacted negatively and the Wall Street started the day on the backfoot. At the moment, the Dow Jones Industrial Average and the S&P 500 were losing 0.6% and 0.4%, respectively.
In the meantime, the US Dollar Index, which failed to stay in the positive territory amid sharp upsurges seen in the EUR/USD and the GBP/USD pairs, looks to end the day in the negative territory to help the pair limit its losses for the time being. As of writing, the DXY was down 0.2% on the day at 94.05.
The next significant data release from New Zealand will be the trade balance on Wednesday. On the other hand, the FOMC is going to announce its interest rate decision and release its monetary policy statement on Wednesday as well.
Technical levels to consider
The pair could face the first support at 0.6640 (50-DMA), 0.6570 (Sep. 19 low) and 0.6500 (psychological level). On the upside, resistances are located at 0.6700 (Sep. 21 high), 0.6760 (Aug. 8 low) and 0.6810 (Aug. 1 high).
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