NZD/USD struggles to recover above 0.69 after dismal GDT auction outcome

GDT Price Index drops 1.2% in the latest auction.
Risk aversion continues to dominate the price action.
US Dollar Index sticks to daily gains, stays below 95.

Eren Sengezer FXStreet

On Tuesday, the NZD/USD pair broke below the 0.69 mark to refresh its lowest level since late May and failed to stage a recovery afterward. As of writing, the pair was trading at 0.6895, losing 0.65% on the day.

Earlier in the session, the GDT price index in New Zealand dropped by 1.2% in the bi-weekly auction following the 1.3% reduction seen in the previous auction, making it difficult for the kiwi to retrace its losses against the greenback.

Furthermore, the risk-sensitive NZD faces further selling pressure in the risk-off environment on Tuesday. Commenting on the market sentiment, "the NZD/JPY, which tends to decline when risk aversion permeates the markets, gave back half of the gains achieved in recent weeks, and the lofty 80.00-ish figure seems now toast," writes Gonçalo Moreira, research expert at FXStreet.

On the other hand, following the mixed macroeconomic data releases from the United States, the US Dollar Index failed to push above the critical 95 mark. Nonetheless, the index remains on track to close the day higher as it consolidates in the 94.70/80 region.

Technical levels to consider

The immediate support for the pair aligns at 0.6850 (May 16 low) ahead of 0.6800 (psychological level) and 0.6775 (Nov. 17 low). On the upside, resistances could be seen at 0.6940 (Jun. 19 high), 0.6990/0.7000 (50-DMA/psychological level) and 0.7060 (Jun. 6 high).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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