- Escalating geopolitical tensions in the Middle East seemed to benefit the USD’s safe-haven status.
- The global flight to safety seemed to drive flows away from perceived riskier currencies – like the Kiwi.
The NZD/USD pair failed to capitalize on its early uptick and has now drifted into the negative territory for the fourth consecutive session, hitting over one-week lows around the 0.6365 region in the last hour.
The prevailing risk-off mood - as depicted by a weaker trading sentiment around equity markets and reinforced by a sharp downfall in the US Treasury bond yields - underpinned the US Dollar's relative safe-haven status and was seen driving flows away from perceived riskier currencies - like the Kiwi.
Reviving safe-haven exerts some pressure
Drone strikes on the world's largest crude-processing facilities in Saudi Arabia over the weekend increased tensions between the US and Iran. This coupled with weaker Chinese macro data further fueled concerns about slowing global growth and dented the global risk sentiment at the start of a new week.
With investors looking past the recent optimism over the resumption of the US-China trade talks, the global flight to safety now seemed to act an exclusive driver of the pair's momentum through the mid-European session on Monday amid absent relevant market moving economic releases from the US.
It, however, remains to be seen if the ongoing slide marks the end of the recent corrective bounce from multi-year lows or is seen as a buying opportunity as market participants now start repositioning for this week's key event risk - the highly anticipated FOMC meeting on September 17-18.
Technical levels to watch
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