NZD/USD stabilizes around 6-week old support-line ahead of trade discussions in Shanghai

NZD/USD rests on near-term support-line as traders await details of the key event.
The US Dollar (USD) seesaws ahead of trade negotiations with China, FOMC while President Trump’s comments exert additional downside pressure.
Aussie Building Permits, the US second-tier data will also be observed for fresh impulse.

Anil Panchal FXStreet

With all eyes on one of this week’s key event, i.e. the US-China trade talks in Beijing, the NZD/USD pair rests on near-term support-line as it takes the rounds to 0.6633 at the start of Tuesday’s Asian session.

Given the lack of at domestic economic calendar, the Kiwi pair largely depended on the offshore events, mainly trade-related headlines concerning the US and China. The quote registered modest losses on Monday as earlier declines due to markets’ positioning ahead of the Fed meeting and trade negotiations lost momentum on the US President Donald Trump’s continued criticism of the Federal Reserve’s monetary policy. Adding to the greenback’s weakness was weaker than expected, also consecutive third negative, print of the US Dallas Fed Manufacturing Index.

While the much-awaited Federal Open Market Committee (FOMC) meeting is still a day far, investors will keep an eye over the two-day long trade discussions between the US and Chinese diplomats in Beijing. The event has additional importance as it directly affects the world’s largest commodity user China.

Latest headlines concerning the meet are mostly downbeat with neither side expecting any breakthrough from the fresh discussions after a three-month gap.

Other than following trade/political news, investors will also keep an eye over Australia’s Building Permits and second-tier data from the US in order to get fresh directions. It should also be noted that Australia is the largest consumer of New Zealand and hence any data from its trading partner can determine the New Zealand Dollar (NZD) moves.

Technical Analysis

Pair’s U-turn from near-term key support-line increases the odds for its pullback to revisit July 08 high around 0.6655. However, 21-day exponential moving average (EMA) at 0.6673 might confine further advances. Meanwhile, the downside break of 0.6630 opens the gate for additional declines to monthly low surrounding 0.6567 with 0.6600 round-figure being an intermediate halt during the drop.

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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