NZD/USD corrects from monthly tops near 0.7250 ahead of US CPI, Powell

NZD/USD fails to draw bids from broad US dollar decline.
New Zealand-China trade tensions, T-yields bounce weigh.
All eyes remain on the US CPI data and Powell’s speech.

Dhwani Mehta FXStreet

The corrective pullback in NZD/USD appears to gather pace in the European session, as the rates look to test the 0.7200 level.

The Kiwi extends its retreat from one-month highs of 0.7254, having failed to find acceptance above the latter on several occasions.

The latest leg down in the spot could be mainly attributed to a quick rebound seen in the US dollar across its main peers, as the broader market sentiment turns somewhat tepid.

The key catalyst behind NZD/USD’s weakness is the latest tiff between New Zealand and China over Beijing’s suspension of seafood imports. In response, the NZ authorities have asked for urgent clarification from their Chinese counterpart over the matter.

Further, the bounce in the US Treasury yields also seems to dull the attractiveness of the kiwi dollar as an alternative higher-yielding asset. Also, downbeat Chinese CPI figures for January failed to offer any respite to the NZD bulls.

Attention now turns towards the US CPI release and the Fed Chair Jerome Powell’s speech for fresh dollar trades. The Consumer Price index (CPI) is seen higher at 0.3% on the month and 1.5% YoY after December's 0.3% and 1.4% increase. Core CPI is expected to rise by 0.2% and 1.5% following 0.1% and 1.6% prior.

NZD/USD: Technical outlook

“An ascending trend line from January 11 guards the quote’s immediate upside around 0.7260. However, NZD/USD bears may wait for a clear downside break of a seven-week-old support line, at 0.7130 now, for fresh entries,” FXStreet’s Analyst Anil Panchal notes.

NZD/USD: Additional levels

NZD/USD

Overview
Today last price	0.7213
Today Daily Change	-0.0026
Today Daily Change %	-0.36
Today daily open	0.7239

Trends
Daily SMA20	0.7183
Daily SMA50	0.7142
Daily SMA100	0.6938
Daily SMA200	0.6714

Levels
Previous Daily High	0.7256
Previous Daily Low	0.7215
Previous Weekly High	0.7226
Previous Weekly Low	0.7135
Previous Monthly High	0.7316
Previous Monthly Low	0.7096
Daily Fibonacci 38.2%	0.724
Daily Fibonacci 61.8%	0.7231
Daily Pivot Point S1	0.7217
Daily Pivot Point S2	0.7196
Daily Pivot Point S3	0.7176
Daily Pivot Point R1	0.7258
Daily Pivot Point R2	0.7278
Daily Pivot Point R3	0.7299

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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