NZD/USD: bulls run out of steam at key resistance in 80% correction

NZD/USD has opened the week at 0.6758 and is oscillating are there in a slow start and only a slew of Chinse data later today ahead of NZ CPI tomorrow.

As far as last week's close went, the bird made a partial recovery of the dollar's attack in the previous session from 0.6786 down to 0.6725 the late London low where NY traders bid the pair right back up to 0.6764, steadying around 0.6760 for the close and -0.3% over the full trading day.

"The kiwi continues to struggle, as poor domestic data and the uncertain global trade backdrop take their toll. The local CPI release tomorrow will be a critical event to determine whether this weakness can continue, especially at a time when market positioning (apparently) still remains extremely short," analysts at ANZ argued. 

Greenback mixed and enables 80% correction

The US dollar of has been as mixed as it was on Friday, following last week's US CPI inflation that came in slightly weaker than market expectations; (Headline CPI was up 0.1% m/m, compared with 0.2% expected, to reach 2.9% y/y). However, the greenback remains in the hands of the bulls given demand for US assets amid prevailing trade tensions and indeed favourable interest rate differentials keep the greenback underpinned. Before the NY session's fade, the DXY was once again testing the key technical pivot at 95.149 while 97.873 remains as the next potential target. 

NZD/USD levels

A deeper support comes as 0.6720 and resistance is located at 0.6860 (21-D SMA 0.6816). 0.6783 is where the 10-D SMA is located and where the descending trend line is located. 0.6920 puts the bulls back in control and the June highs will be up for grabs. However, bulls really need to get above the 200-month moving average resistance at 0.7007.