- NZD/USD witnessed some fresh selling and eroded a part of Friday’s goodish recovery move.
- A softer risk tone benefitted the safe-haven USD and weighed on the perceived riskier kiwi.
- The set-up favours bearish traders and supports prospects for further near-term weakness.
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, around the 0.6975 region.
The pair struggled to capitalize on the previous session’s goodish rebound of over 50 pips from four-month tops and faced rejection near the key 0.7000 psychological mark. The US equity futures kicked off the new week on a downbeat note, which drove some haven flows towards the US dollar and weighed on the perceived riskier kiwi.
The greenback was further supported by the upbeat US economic outlook, bolstered by the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package. Adding to the optimism, US President Joe Biden on Thursday made an ambitious pledge of administering 200 million vaccine shots in 100 days.
Further supporting the prospects for a relatively faster US economic recovery from the pandemic were speculations for an additional $3.0 trillion infrastructure plan from the US. This comes after the New Zealand government last week announced a series of measures to cool the housing market and eased pressure on the RBNZ to raise rates.
This was seen as another factor that weighed on the New Zealand dollar and supports prospects for a further near-term depreciating move for the NZD/USD pair. Hence, a subsequent slide back towards challenging multi-month lows, around the 0.6945-40 region, looks a distinct possibility amid absent relevant market moving economic releases.
Technical levels to watch
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