- China’s upbeat trade figures and New Zealand’s stronger GDT Price Index failed to impact the NZD/USD.
- The market is now consolidating in a narrow trading range of 0.7120 – 0.7077 ahead of NZD manufacturing sales data later today.
- Forex trading market participants may sell below the $0.7075 level to target the $0.7024 and $0.6967 levels.
During Wednesday’s European trading hours, the NZD/USD currency pair failed to stop its previous three-day-long downward rally. It dropped further below the 0.7100 level as the sharp declines in the AUD/USD pair following the Reserve Bank of Australia’s monetary policy announcements pushed the NZD/USD currency pair lower. The market is now consolidating in a narrow trading range between 0.7120 – 0.7077 ahead of NZD manufacturing sales data later today.
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Stronger US dollar weights on the NZD/USD
The positive move in the US Treasury bond yields helped the US dollar recover further from one-month lows. This low level was touched in reaction to the dismal headline NFP print.
The return of US traders from an extended weekend boosted the greenback further. While the market players relived the virus-led economic fears. That’s done on the back of Friday’s downbeat US jobs report for August and ISM Services PMI data. Thus, the broad-based US dollar strength was seen as one of the key factors that kept the NZD/USD currency pair down.
At this particular time, the NZD/USD pair is trading at 0.7088 and consolidating in the range between 0.7081 and 0.7114. The mounting fear over the US stimulus adds further downside pressure on the NZD/USD pair.
The Major Fundamentals Affecting the NZD/USD
CNN reported, “House Republicans could face heightened pressure to vote against a bipartisan infrastructure package when they return to Washington later this month.” Furthermore, China’s upbeat trade figures and New Zealand’s stronger GDT Price Index failed to impact the NZD/USD. That’s because the risk-off mood positively. Furthermore, the Wall Street benchmarks started the week negatively, and the US 10-year Treasury yields crossed August highs to mark 5.5 basis points (bps) of an upside to 1.377% by the end of Tuesday’s North American session.
The coronavirus and stimulus headlines were considered one of the key reasons behind this downfall. Furthermore, the recognition of the last week’s US jobs reports and ISM data also put downside pressure on the market mood.
As a result, the broad-based US dollar maintained its previous day’s bullish bias and hit near a one-week peak on Wednesday against major peers. The US dollar’s bullish bias was buoyed by higher Treasury yields and a weaker euro amid caution before a European Central Bank policy decision.
The 10-year US government bond yield grew past 1.36%.
The benchmark 10-year US government bond yield grew past 1.36% amid expectations that the Fed might still start rolling back its pandemic-era stimulus in November. The US Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.03% to 92.543 by 12:01 AM ET (4:01 AM GMT). Thus, the upbeat bias in the dollar tends to undermine the NZD/USD currency pair.
The lack of significant data or events may restrict the market’s moves. However, qualitative catalysts like virus woes and economic fears can keep weighing on the NZD/USD price. Meanwhile, the comments from Fed New York President John C. Williams will not lose their importance.
NZD Manufacturing Sales in Focus
Statistics New Zealand is due to report Manufacturing Sales q/q data during the US session. There’s no update on economists’ forecast, however, the figure above 2.1% will support the NZD/USD pair and vice versa.
NZD/USD Price Forecast – Technical Levels
Pivot Point 0.7137
NZD/USD Technical Outlook – Eyes on NZD Manufacturing Sales Figure
On Wednesday, the NZD/USD price prediction remains bearish below the 0.7137 level. In the 4 hour timeframe, the New Zealand dollar has violated an upward trend line, driving a solid selling bias in the NZD/USD currency pair.
On the bullish side, the NZD/USD pair is likely to face immediate resistance at 0.7140, which is extended by 50 periods of EMA (exponential moving average – red line). Further, on the higher side, the breakout of the 0.7140 level is likely to extend further upward trends until the 0.7169 level.
In contrast, the breakout of the 0.7077 level is likely to open additional room for selling until the 0.7024 support level. Moreover, the breakout of the 0.7024 support level is expected to extend the selling trend until the next support level of 0.6970.
In addition to this, the 50-period exponential moving average and the leading indicator, stochastic RSI, suggest a strong selling bias in the NZD/USD currency pair.
Therefore, the Forex trading market participants may sell below the $0.7075 level to target the $0.7024 and $0.6967 levels. Alternatively, traders can take a buying position above the $0.7077 level today. All the best!
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