NZD/USD: Covid woes in Northland, US stimulus worries back sellers below 0.7200

NZD/USD drops to 0.7170, down 0.11% intraday, during the initial Asian session on Monday. In doing so, the kiwi pair extends Friday’s pullback from the January 15 highs. Behinds the moves are market concerns over the US fiscal aid package and fresh coronavirus (COVID-19) worries for New Zealand, the country that has been so far immune from pandemic after the first hit.

Virus woes are back in NZ…

Having found the first covid variant in Northland, authorities from New Zealand (NZ) are trying to tame the fears and lock the door for the pandemic’s re-entry. The 56-year-old woman recently alarmed policymakers from the Pacific nation after marking NZ’s first case of the covid variant. Elsewhere, the US is up for recalling ban for travelers from the UK, Brazil and Ireland whereas France is teasing the third lockdown.

On the other hand, some of the US Democratic Party members are unsure of backing President Joe Biden’s second stimulus and adds to the market’s risk-off mood.

Further, recently downbeat data from the developed nations probe earlier optimism backed by Joe Biden’s victory in the US 2020 elections.

Read: Gridlocked Washington and covid risks to weigh on risk appetite

That said, Wall Street benchmarks closed in the red by the end of Friday’s trading while the US 10-year Treasury yields also eased above 1.0%.

Considering the lack of major data/events, NZD/USD traders should pay attention to how the NZ government deals with the fresh virus threats. Also likely to direct the pair traders are hints over the US covid relief package and virus conditions in the rest of the world.

Technical analysis

Although highs marked during the late December and mid-January restricts NZD/USD upside near 0.7240, the sellers also await a clear downside break of the previous resistance line from January 06, at 0.7157 now, for fresh entries.