“¢ Broad-based USD strength prompts some aggressive selling.
“¢ A slump in commodity prices adds to the downward pressure.
The NZD/USD pair continued losing ground through the mid-European session and tumbled to over two-week lows, around the 0.6725 area in the last hour.
Having repeatedly failed to build on/sustain its up-move beyond 20-day SMA, the pair came under some intense selling pressure on Thursday and was being weighed down by a broad-based US Dollar strength.
Upbeat economy outlooks from the Fed Chair Jerome Powell and the central bank’s Beige Book report, coupled with a goodish pickup in the US Treasury bond yields continued underpinning the buck and seems to have prompted some aggressive long-unwinding trade.
Moreover, a slight deterioration in investors’ risk-appetite, as depicted by a negative trading sentiment around equity markets, further benefitted the greenback’s safe-haven appeal and drove flows away from perceived riskier currencies – like the Kiwi.
Meanwhile, the ongoing slump in commodities exerted some additional downward pressure on commodity-linked currencies – like the Kiwi and was seen collaborating to the pair’s steep decline on Thursday.
Moving ahead, today’s second-tier US economic data – Philly Fed Manufacturing Index and the usual initial weekly jobless claims, seems unlikely to have any meaningful impact but might still be looked upon for some short-term trading opportunities.
Technical levels to watch
The 0.6715 level is likely to act as an immediate support, below which the pair is likely to accelerate the fall back towards retesting over 2-year lows, around the 0.6690-85 region.
On the flip side, immediate resistance is now pegged near the 0.6755-60 area, which if cleared might trigger a short-covering bounce back towards 20-day SMA hurdle, currently near the 0.6800 handle.
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