NZD/USD consolidates recovery moves above 0.6600

NZD/USD eases to 0.6610 amid the pre-Tokyo open Asian session on Tuesday. The kiwi pair ended up extending Friday’s losses to the lowest since July 21 on Monday. However, the late-US session recovery, followed by the period of range trading between 0.6607 and 0.6618, portrays the play of bulls and bears.

The US dollar index (DXY) recently benefited from upbeat US data, as well as the month-end position adjustments. However, the greenback’s gains are likely to be challenged by fears of further delay in the much-awaited fiscal stimulus plan. The American policymakers failed to offer any updates on jobless claim benefits that expired Friday. In her latest appearance, House Speaker Nancy Pelosi turned down odds of any deal during this week, citing US President Donald Trump as the key hurdle.

Other than the policy paralysis, the coronavirus (COVID-19) also become a major threat to the markets. New Zealand’s largest customer Australia has recently been badly hit by the virus wave 2.0. Even if chatters concerning the vaccine are live, the World Health Organization (WHO) said, no 'silver bullet' to beat COVID-19.

Elsewhere, increasing odds of the Reserve Bank of New Zealand’s (RBNZ) dovish tone adds to the pair’s weakness. While identifying this, analysts at the Australia and New Zealand Banking Group (ANZ) said, “With the RBNZ set to strike a dovish tone next week that will limit NZD upside too, suggesting a more neutral near-term outlook.”

Looking forward, Australia’s Retail Sales, Trade Balance and RBA can offer immediate direction to the pair amid a lack of major catalysts at home. While the RBA is widely anticipated to mark dovish halt, upbeat data may help the NZD/USD prices to probe the latest downside. Though, any more disappointment from the pandemic or US stimulus headlines will be enough for the bears to attack the early-July top.

Technical analysis

21-day SMA near 0.6605 restricts the pair’s immediate downside ahead of June month’s top near 0.6585. Alternatively, bulls have to mark a decisive break above 0.6700 to attack the yearly top surrounding 0.6740.