- NZD/USD looks to close deep in the negative territory on Thursday.
- US Dollar Index trades at fresh multi-month highs above 93.50.
- Risk sentiment is likely to continue to drive NZD/USD’s action ahead of the weekend.
The NZD/USD pair dropped to its lowest level since November at 0.6809 on Thursday. Although the pair managed to stage a recovery during the American trading hours, it lost its momentum near 0.6850 and was last seen losing 0.85% on the day at 0.6830.
Escalating geopolitical tensions between the US and China, the coronavirus-related lockdown in New Zealand and the general risk-averse market atmosphere continue to weigh heavily on NZD/USD since the beginning of the week. Reflecting the dismal market mood, major European equity indexes suffered heavy losses and Wall Street’s main indexes trade mixed on Thursday.
In the meantime, the greenback, which received a boost from the FOMC’s July meeting minutes, capitalizes on safe-haven flows and the US Dollar Index is staying above 93.50, the highest level in nine months.
Previewing NZD/USD’s near-term outlook, “there is no change to the weak outlook and a break of 0.6840 would shift the focus to 0.6800,” UOB Group analysts said. “On the upside, a breach of 0.6960 (‘strong resistance’ level was at 0.7000 yesterday) would indicate that the downward pressure has eased.”
Technical levels to watch for