NZD/USD seesaws around 4-year low as trade/political tensions prevail

NZD/USD nosedived to late-2015 lows amid US-China trade pessimism, overall USD strength.
Chinese delegation’s early exit from the US, Trump’s comments triggered risk-off amid geopolitical tension surrounding the Middle East.
The light economic calendar keeps the market focus on trade/political headlines.

Anil Panchal FXStreet

NZD/USD portrays the recently renewed trade-war risk the best way as it seesaws near the four-year bottom while taking rounds to 0.6265 during early Monday morning in Asia.

The Kiwi pair slumped to multi-year low on Friday after the Chinese delegation canceled their visit to the US farms following the US President Donald Trump’s comments that he wants a full deal with China. Though, China’s Xinhua recently termed the trade talks in Washington as “constructive”.

Also exerting the downside pressure is the US Dollar’s (USD) across the board strength on the back of the risk-aversion wave that gets a boost from the Middle East. The Saudi-Iran tussle seems to have worsened after Yemeni rebels warned of another attack and the US deployed additional forces in the region. Saudi Arabian Foreign Minister conveys that Iran’s launch of an attack would risk war.

While there is nothing major on the economic calendar that could lure investors, trade/political headlines will be the key to follow for fresh direction ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, up for Wednesday.

It should, however, be noted that the US activity numbers for September can entertain short-term traders.

Technical Analysis

In a contrast to the oversold signal by 14-day relative strength index (RSI), which favors the pair’s pullback towards 0.6300 and 10-day SMA level of 0.6330, a sustained trading below the latest low surrounding 0.6250 risks further south-run towards a falling trend-line connecting lows of May and early-September, around 0.6225.

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.

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