NZD/USD Price Analysis: Nursing losses after rejection at 0.6130

NZD/USD feels the pull of gravity as risk sentiment weakens on US-China tussle.
The pair is trapped in a narrowing price range, according to the daily chart.

Omkar Godbole FXStreet Contributor

NZD/USD is trading in the red near 0.6110 at press time, having faced rejection at 0.6130 early Friday.

On Thursday, the pair traded well within Wednesday's high and low and formed an inside day candlestick pattern. While the pair is nursing losses at press time, it is still trapped in Thursday's trading range.

Essentially, the pair is trapped in a narrowing price range. As a result, the immediate outlook is neutral. Acceptance under Thursday's low of 0.6106 would confirm range breakdown. On the higher side, 0.6150 is the level to beat for the bulls.

A downside break looks likely as the futures on the S&P 500 are reporting a weakening of risk sentiment, despite China's decision to raise its fiscal deficit target. The dragon nation is planning to spend more this year to battle the coronavirus-induced slowdown.

The escalating US-China tensions over the coronavirus outbreak and their respective interests in Taiwan and Hong Kong looks to be weighing over the risky assets.

Also, the case for range breakdown looks strong due to dovish comments by Reserve Bank of New Zealand's governor Orr. The chief said early Friday that the central bank would employ more stimulus measures if needed, mostly in the form of increased bond purchases. Meanwhile, the finance minister said the concept of helicopter money (fiscal stimulus measure) is being discussed

Daily chart

Trend: Bearish below Thursday's low

Technical levels

1. R3 0.6188
2. R2 0.6169
3. R1 0.6142
PP 0.6123
1. S1 0.6096
2. S2 0.6077
3. S3 0.605

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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