- NZD/USD tumbles 0.98% on broad US dollar strength on Monday.
- Risk appetite remains mixed as the Covid-19 outbreak in China and woes in Russia and Ukraine dominate the headlines.
- NZD/USD Price Prediction: Bias to the upside, but once 0.6900 gave way to NZD bears opened the door for a correction.
After consolidating since the middle of last week, New Zealand dollar slides have just broken below the 200-day moving average (DMA) amid general US dollar strength and mixed market sentiment, as US equities show this. NZD/USD is trading at 0.6896.
US stocks mixed, dollar strong as geopolitical issues and Covid-19 outbreak weigh on mood
US stock indices are oscillating between winners and losers, while the greenback remains buoyant. The US dollar index, a measure of the value of the dollar against its peers, was up 0.33%, standing at 99.138, despite lower US Treasury yields. Money market futures show the Federal Reserve would rise 50 basis points at its May meeting, supporting the greenback as month-end flows boost the dollar.
Meanwhile, a Covid-19 outbreak in China, particularly Shanghai, weighed on Asian stocks, dampening the mood slightly. The standoff between Russia and Ukraine continues to grab headlines, but doesn’t change sentiment like it did at the start of the war.
An absent New Zealand economic record left NZD/USD adrift of market sentiment ahead of the US open. The U.S. Economic Record showed the U.S. merchandise trade balance for February which came in better than expected, posting a deficit of $106.59 billion, down from $107.57 billion in the previous reading. Later, the Dallas Fed’s manufacturing index for March rose 8.7, below estimates and lagging Feb. 14.
NZD/USD Price Prediction: Technical Outlook
NZD/USD broke below the 200-day moving average (DMA) at 0.6909 and slipped below 0.6900. Nevertheless, although this is a “bearish” signal, NZD/USD is in a corrective phase, after a more pronounced advance from 0.6740 to just below the 0.7000 mark.
That said, the first support for NZD/USD before resuming higher would be the January 13 daily high at 0.6890. Breaking the latter would expose the daily high from February 23 at 0.6809, followed by the 50-DMA at 0.6746.