NZD/USD clings to small daily gains above 0.6250 after erasing bearish gap

China's Caixin Manufacturing PMI drops to record low in February.
US Dollar Index slumps to monthly lows near 97.50.
US 10-year Treasury bond yield erases more than 9% on Monday.

Eren Sengezer FXStreet

The NZD/USD pair opened the week with a bearish gap and slumped to its lowest level since May 2009 at 0.6192 during the Asian trading hours. However, with the USD coming under strong selling pressure ahead of the American session, the pair staged a rebound and erased its gap. As of writing, the pair was up 0.12% on the day at 0.6258.

The data from China showed that the Caixin Manufacturing PMI plummetted to an all-time low of 40.3 in February from 51.1 in January to reflect the impact of the coronavirus outbreak on the economy. Additionally, this reading missed the market expectation of 45.7 by a wide margin. On the other hand, the Terms of Trade Index for the fourth quarter in New Zealand improved to 2.6% from 1.9% but failed to help the kiwi find demand.

USD weakens on falling T-bond yields

On the other hand, with the flight-to-safety taking control of financial markets during the European trading hours, the US Treasury bond yields fell sharply and weighed on the greenback. While the 10-year reference was erasing more than 9% on a daily basis, the US Dollar Index was at its lowest level since early February at 97.51, down 0.62% on the day.

In the second half of the day, Markit Manufacturing PMI (final) and ISM Manufacturing PMI from the US will be looked upon for fresh impetus. However, developments surrounding the coronavirus outbreak and their impact on the financial markets are likely to continue to remain in the limelight.

During the Asian trading hours on Tuesday, the Reserve Bank of Australia will announce its monetary policy decisions and a significant reaction in the AUD/USD pair could provide a directional clue to the positively correlated NZD/USD pair as well.

Technical levels to watch for

NZD/USD

Overview
Today last price	0.6259
Today Daily Change	0.0009
Today Daily Change %	0.14
Today daily open	0.625

Trends
Daily SMA20	0.6391
Daily SMA50	0.6531
Daily SMA100	0.6484
Daily SMA200	0.649

Levels
Previous Daily High	0.632
Previous Daily Low	0.6192
Previous Weekly High	0.6359
Previous Weekly Low	0.6192
Previous Monthly High	0.6504
Previous Monthly Low	0.6192
Daily Fibonacci 38.2%	0.6241
Daily Fibonacci 61.8%	0.6271
Daily Pivot Point S1	0.6188
Daily Pivot Point S2	0.6125
Daily Pivot Point S3	0.6059
Daily Pivot Point R1	0.6317
Daily Pivot Point R2	0.6383
Daily Pivot Point R3	0.6446

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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