NZD/USD clings around 0.6580 as it falls for the sixth straight day
|- On Thursday, the NZD/USD plunged to levels not seen since November 2, 2020.
- Risk-aversion in the financial market spurred demand for safe-havens like the USD, weighed on the NZD.
- US Stocks finished in the red, led by the S&P, the less damaged was the Dow Jones Industrial.
- The NZD/USD is downward biased, and a break below 0.6500-11 might send the pair tumbling to 0.6478.
The New Zealand dollar extends its free fall for the sixth consecutive day against the US dollar, plunging close to 300-pips from 0.6850 down under the 0.6600 figure. As the New York session winds down and the Asian session begins, the NZD/USD is trading at 0.6583 at the time of writing.
Risk aversion hurts the prospects of risk-sensitive peers like the NZD
The market sentiment is downbeat. Factors like the hawkish Federal Reserve, which said that might raise interest rates “soon,” in the monetary policy statement, did not have an impact. However, when US central bank Chair Jerome Powell said at the presser that “the committee is of a mind to raise the federal funds rate at the March meeting assuming that the conditions are appropriate for doing so,” those were the words that caused volatility in the market.
Cash stock indices in the US ended with losses. The S&P 500 fell in the session 1.4%, finished at 4326.51, while technology stocks, reflected by the Nasdaq Composite, fell for the second straight day 0.54%, down to 13,352.78, while the less damaged Dow Jones, was almost flat a 0.02% loss, finishing at 34,169.78.
Sector-wise, the leading gainers were energy, utilities, and consumer staple, up some 1.24%, 0.78%, and 0.58% each. Contrarily, the hardest hit by the sell-off were consumer discretionary, real estate, and industrials, falling 2.27%, 1.75%, and 0.93%, respectively.
In the meantime, the US Dollar Index finished up 1.272%, sitting at 97.220, while the 10-year US T-bond yield ended at 1.803%, down five basis points.
A light Asian economic docket, referring to New Zealand data, featured the ANZ NZ consumer confidence, which came at 98, in line with the previous reading. Meanwhile, Japan’s Consumer Price Index (CPI) and Australia Producer Price Index (PPI) will be featured at 23:00 and 23:30 GMT, respectively.
NZD/USD Price Forecast: Technical outlook
The NZD/USD broke a downslope trendline of a descending channel (probably a bullish flag). The result of that emphasized the pair as downward biased, exposing September 24, 2020, a daily low at 0.6511. The closeness of the aforementioned price level to the 0.6500 figure would make the 0.6500-11 region the NZD/USD first support. A breach of it would open the door for further losses. The following demand zone would be August 20, 2020, 0.6487, followed by June 20, 2020, cycle low at 0.6478.
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