NZD/USD: Bulls battle two-month-old resistance near 0.7000 amid mixed sentiment

• NZD/USD seesaws around one-week high, edges higher of late.
• Market sentiment improves on upbeat Wall Street, improving covid conditions.
• Cautious mood ahead of week’s key data/events, fears of virus probe bulls.
• US Durable Goods Orders, Consumer Confidence and Housing data to decorate calendar.

NZD/USD struggles to extend the weekly advances beyond 0.7000 as Asian traders prepare for Tuesday’s work. The Kiwi pair refreshed one week top the previous day as risk appetite improved on coronavirus details from the UK and Australia, as well as upbeat earnings fuelling US equities. Though, the cautious mood before the key Federal Open Market Committee (FOMC) meeting, not to forget today’s top-tier data from the US, keeps a tab on the prices.

The UK marked a sixth consecutive daily fall in the covid infections on Monday to a new low in over three weeks, to 24,950 on Monday from 29,173 on Sunday per Reuters. Even so, Reuters said, “Monday's data showed 14 new deaths, down from 28 on Sunday and the lowest daily number since July 12. There have been 445 deaths in the past seven days, 50% more than the week before.”

Australia joins the UK in flashing mixed figures concerning the virus as numbers from South Australia and Victoria favor the exit strategy of local lockdowns. However, infections in the most populous state New South Wales and anti-lockdown protests in Sydney challenge the optimists. Amid these plays, Reuters said, “With about 32,900 cases and less than 1,000 deaths, Australia has kept its coronavirus numbers relatively low although the Delta strain and low vaccination numbers among developed economies have worried residents.”

Elsewhere, upbeat earnings from the US technology giants and softer-than-expected US New Home Sales, as well as Dallas Fed Manufacturing Index, weighed on the US dollar, favoring the Antipodeans.

On the contrary, the deadlock over US President Joe Biden’s infrastructure spending passage in the Senate, despite Democrats’ weekend efforts, joins fears of another dovish tilt of the Fed to weigh on sentiment.

Amid these plays, Wall Street benchmarks posted gains whereas the US 10-year Treasury yields remained mostly unchanged.

Looking forward, a light calendar at home requires NZD/USD traders to keep their eyes on the trans-Tasman updates and recently heating US-China tussles for fresh impulse. Following that, the US Durable Goods Orders, Consumer Confidence and Housing Price Index will be crucial to watch. Above all, this week’s Fed meeting, Thursday for New Zealand, will be critical to follow as policymakers are likely to provide signals of the much-awaited tapering.

Read: Durable Goods Orders Preview: Why expectations could be too high, data useful for trading GDP

Technical analysis

NZD/USD bulls battle a two-month-old resistance line around 0.7005, a clear break of which will escalate the pair’s upside momentum to a 200-DMA level near 0.7090. Meanwhile, a three-week-old support line close to 0.6980 restricts the short-term downside of the quote.