NZD/USD wavers around 0.7100 after the upbeat start to the week

• NZD/USD begins the week with an upside gap of near 15 pips.
• Brexit, US stimulus and covid vaccine flashed positive news off-late.
• New Zealand’s Business NZ PSI, Visitor Arrivals drop in November and October respectively.
• Risk news keeps the driver’s seat amid a light calendar.

NZD/USD eases to 0.7095 after portraying a gap-up start to the week’s trading during Monday’s Asian session. The kiwi pair began the week on a front foot to 0.7093, before rising to 0.7103, as risk headlines flashed welcome signs during the weekend. However, the recently downbeat data from New Zealand seems to have probed the bulls.

Not only Business NZ PSI for November, which eased from 50.8 revised to 46.7, a reduction in the Visitor Arrivals during October, from -96.7% to -96.8% YoY, also weighed on the NZD/USD off-late.

Earlier during the day, the quote tracked the market’s positive risk-tone sentiment as news relating to Brexit suggested that the UK and the European Union (EU) will have one more week to solve the Brexit riddle. Also supporting the mood were the tweets from CNN’s Manu Raju indicating the nearness of the US stimulus as well as updates over how the coronavirus (COVID-19) vaccine will be first given to the White House members after the US Food and Drug Administration (FDA) approved it late-Friday.

It should also be noted that the S&P 500 Futures gains 0.50% while benefiting from the news stated above.

While risk news is likely to be the main catalyst for the NZD/USD pair amid a lack of major data up for publishing, analysts at the Australia and New Zealand Banking Group (ANZ) stay positive over the quote while saying, “Looking ahead, the risks seem skewed to the upside again this week, with the Half Year Economic and Fiscal Update (HYEFU) and GDP data both likely to be “good news” stories locally, and the US Federal Reserve on track to deliver more easing, likely in the form of increased duration of bond purchases. The latter is expected by many, but confirmation of it has potential to further weaken the USD, to the NZD’s benefit, alongside seasonality that generally delivers a higher NZD into year-end.”

Technical analysis

Although overbought RSI suggests NZD/USD pullback, sellers will stay away unless witnessing a downside break of one-month-old support line, at 0.7045 now.