NZD/USD hits 2-week lows, back to 0.7200 handle amid stronger US dollar
- NZD/USD back to the 0.7200 handle on stronger USD
- Last week’s long NZD/USD trade on upbeat China’s President comments has now been totally retraced.
The NZD/USD is trading at around 0.7206 down 0.88% on Friday.
The NZD/USD is falling for the fourth day in a row and has now tested its 100-period simple moving average on the daily time frame at 0.7213.
The recent drop down in the kiwi is mainly attributed to US dollar strength. US bond yields are spiking to multi-week highs, which in turns boosts the greenback as more investors turn to US bonds exacerbating the USD demand. The US Dollar Index (DXY) is currently trading at 90.26 which is a level not seen since early April.
Last week move higher in the kiwi close to the 0.7400 handle was mainly driven by enthusiasm on the back of the comments of the Chinese President. Xi Jinping said that he wanted to push for free trade and open up its economy to foreign investments. He also spoke about lowering tariffs on the auto industry. However, later on, the upbeat comments were denied by a Chinese official who said that China would still retaliate in a trade war environment. Since China is a top trading partner with New Zealand, any news that affects China also generally affects the NZD.
Earlier on Wednesday, the New Zealand inflation numbers for the first quarter of the year came in line with expectations. The kiwi had a 30-pip intraday boost up but quickly resumed its downtrend as the data had no strong deviation to the upside and the general sentiment had shifted to bearish for the kiwi.
NZD/USD 4-hour chart
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Support is priced in at 0.7188 swing low and at 0.7153 cyclical low, while resistance is seen at 0.7244 swing low and 0.7350 swing high and at 0.7396 cyclical high.
Author
Flavio Tosti
Independent Analyst
