The ongoing steady recovery mode in NZD/USD appears to have lost steam somewhat near 0.6880 region, following the release of mixed Chinese data dump.
The bulls take a breather after Friday’s solid recovery from near multi-month troughs reached near 0.6820 levels, with unimpressive Chinese macro updates offering an excuse to stall the upward momentum. Moreover, subdued Asian markets combined with steadying oil prices weigh negatively on the higher-yielding currency NZD.
However, solid NZ retail sales data combined with a broadly weaker US dollar, in the wake of downbeat US retail sales and CPI data, keep the recovery mode intact from dovish RBNZ induced last week’s sell-off. The recent policy outcome from RBNZ brought back divergent monetary policy outlooks between the Fed and RBNZ to the fore, especially after the OZ central bank talked down inflation outlook.
With the Chinese data out of the way, focus shifts towards RBNZ assistant governor McDermott’s speech due later in early Europe. Meanwhile, the US datasets will be also eyed in the NA session.
NZD/USD Levels to consider
To the upside, the next resistance is located at 0.6888/0.6900 (10-DMA/ round figure), above which it could extend gains to 0.6928 (May 9 high) and from there to 0.6948/50 (May 8 high/ psychological levels). To the downside immediate support might be located at 0.6818 (multi-month lows), and from there to 0.6800 (key support), below 0.6756 (June 2016 lows) would be tested.