NZD/USD: Sellers attack 0.7100 during three-day downtrend despite positives at home

NZD/USD remains on the back foot for the third consecutive day while easing to 0.7110 during Tuesday’s Asian trading. In doing so, the kiwi pair fades bounce off 0.7096, the lowest level since December 29 flashed the previous day, despite welcome fundamentals from New Zealand.

As per the fourth-quarter (Q4) Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research (NZIER), also known as NZIER Business Confidence, business optimism in the pacific nation has improved during late 2020. The report said, “A net 16% of businesses expect a deterioration in general economic conditions over the coming months, on a seasonally adjusted basis – lower than the 38% in the previous quarter, and well below the 68 percent of businesses feeling pessimistic in March 2020.”

Following that, New Zealand’s Electronic Card Retail Sales grew past-1.0% forecast and 1.4% previous readouts to 3.5% YoY in December.

On the negative side, the New Zealand government raised bars for foreign arrivals by requiring a pre-departure covid-negative test result, except Australia, Antarctica and most Pacific Island countries, starting from January 25. Elsewhere, US President Donald Trump eases travel restrictions from Brazil and Europe, per Reuters, while Australia has its activity restrictions on the cards.

It should be noted that the kiwi pair’s downside the previous day failed to justify upbeat China data. Recently, US President Trump published an executive order to prioritize removing Chinese drones from government fleets. To provide some background, China is the world’s largest commodity player and any negative for it could adversely affect Antipodeans including NZD/USD.

Considering a light calendar in Asia, coupled with a cautious sentiment ahead of the key speeches from the incoming government to the US, NZD/USD may remain depressed despite upbeat domestic catalysts.

Technical analysis

A sustained downside break of an ascending trend line from November 13, currently around 0.7155, directs NZD/USD sellers toward a 50-day SMA level of 0.7077.