- Summary:
- NZDUSD opened this week's trading 40 pips lower than where it closed last Friday on risk aversion and disappointing New Zealand retail sales.
Just like most higher-yielding currency pairs, NZDUSD traded in favor of the dollar at the start of this week. The currency pair opened 40 pips below its opening price at 0.6310 as coronavirus concerns and disappointing New Zealand retail sales weighed down the New Zealand dollar. As of this writing, NZDUSD is trading at 0.6317.
Over the weekend, G20 leaders expressed their concerns about the impact of the coronavirus. According to IMF Director Kristalina Georgieva, Chinese economic growth could slow to 5.6%. Meanwhile, the South Korean Finance Minister warned that the negative effects of the coronavirus could risk economic recovery. Consequently, these concerns sparked worries about global growth.
On the domestic front, it also did not help that New Zealand’s retail sales report for Q4 2019 missed forecasts. The headline figure printed at 0.7% versus the 0.8% forecast. Excluding volatile items, the core version of the report was at 0.5% while the consensus was at 0.9%.
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NZDUSD Outlook
On the daily time frame, we can see that NZDUSD is trading below support at its November 2019 lows at 0.6325. This suggests that there may be enough sellers in the market and the currency pair could soon fall to the next support level at 0.6255 or maybe even to its 2019 lows at 0.6202.
On the other hand, a bullish close above today’s Asian session highs at 0.6328 could mean that NZDUSD may trade higher. There is near-term resistance at 0.6350 as it coincides with the falling trend line when you connect the highs of February 18, February 19, and February 20.