NZD/USD remains heavy at 2021 low near 0.6850 on breaking key support
- NZD/USD takes offers around the lowest since November 2020.
- Downside break of yearly support line, covid woes in New Zealand favor bears.
- Broad USD run-up exerts additional downside pressure on the pair.
- Qualitative catalysts gain more attention, US data also important.
NZD/USD licks its wounds around 0.6865, the yearly low, after declining 0.46% so far during early Thursday. The kiwi pair’s slump could be linked to the technical break of the yearly support line, as well as the broad risk-off mood.
While extending the previous three-day fall, the NZD/USD broke a downward sloping trend line from late 2020, around 0.6860, and dropped to the lowest level in nine months. It should, however, be noted that oversold RSI conditions seem to challenge the pair bears of late.
On the fundamental side, New Zealand reports 11 new covid cases versus the first one marked on Tuesday. The Pacific nation is locked down since then and Prime Minister Jacinda Ardern recently said that the countries medical authorities seem to have found the initial case from Sydney and begun testing all the people at facilities.
Elsewhere, Virus infections in Australia jump to a fresh high since August 2020 and push New South Wales (NSW) to extend the local lockdowns to late August. Furthermore, Reuters said, “The United States leads the world in reported COVID-19 cases and deaths. Daily U.S. cases soared from fewer than 10,000 in early July to more than 150,000 in August as the Delta variant took hold.”
It should be observed that the Fed policymakers’ dissatisfaction from the latest recovery in the job figures, per the FOMC minutes, join hints of tapering to underpin the safe-haven demand of the US dollar.
Amid these plays, the US stock futures and Treasury yields remain mildly offered while Asian equities follow the overall bearish impulse.
Given the lack of major data/events, except for weekly US jobless figures and second-tier activity survey data for August, virus headlines will be important to follow for fresh direction.
Technical analysis
A clear downside break of 0.6860, comprising a downward sloping trend line from December 2020 and a 61.8% Fibonacci retracement of August 2020 to February 2021 upside, becomes necessary for the pair bears to aim for mid-November 2020 bottom of 0.6810 and September 2020 peak close to 0.6800.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
