NZD/USD rangebound close to 0.7200 level with risk events incoming

• NZD/USD was subdued/rangebound on Tuesday, sticking close to the 0.7200 level with risk events incoming.
• The pair shrugged off soft US data as it looks ahead to Wednesday’s FOMC event and New Zealand GDP data.

It’s been a very rangebound session for NZD/USD, the pair swinging between highs of just above 0.7200 and remaining supported at Monday’s low just under 0.7170. Rangebound conditions are unsurprising amid a lack of fundamental drivers on Tuesday, combined with a sense of caution in the market ahead of key events later in the week. On the day, NZD/USD currently trades about 0.1% lower.

In terms of the technical levels to watch out for; to the upside, there is resistance obviously at the 0.7200 level and then this week’s high at under above 0.7220, which happens to also coincide with NZD/USD’s 50-day moving average. Above this, another key area of resistance of note is the March highs at 0.7240, which happens to coincide with the pair’s 21-day moving average. To the downside, this week’s 0.7167 low is the first support to note, followed by last Friday’s low at 0.7150.

Driving the day

Soft US data failed to leave a lasting impact on USD or broader market sentiment on Tuesday. For reference; US Retail Sales dropped more than expected in February, but that mostly represents the fading boost of January’s stimulus cheques. Retail sales will undoubtedly jump again in March after the government hands out another $1400 to each US citizen. Meanwhile, Industrial Production in the month of February also disappointed. Analysts note that poor weather conditions last month contributed to the drop, but note also that global supply shortages also played a factor and this could be a longer-lasting drag. Note that Japanese Industrial Production data was also released overnight and was pretty decent, showing a jump in output of 4.3% during the month of January.

Other than the above, the only other news of note for either the kiwi or US dollar was the results from the latest GlobalDairyTrade auction; the GDT price index dropped 3.8%, which is not bad considering last week’s 15% rise in prices. Meanwhile, whole milk prices were up 23.5%. Kiwi was unfazed.

Key events later in the week including Wednesday’s FOMC meeting and Thursday’s New Zealand Q4 2020 GDP growth numbers are likely to give the pair some more direction. ANZ caution that the growth rate is likely to struggle to match the stellar rebound seen in Q3 2020, though still ought to show a relatively decent pace of growth.