NZD/USD bears flirt with 0.7100 after the biggest daily fall in three weeks

• NZD/USD remains pressured after two day falls to the weekly bottom.
• US dollar strength, led by virus woes, economic fears underpins the bearish impulse.
• Aussie fall and lack of appreciation to virus-led alert level changes, NZ GDT data also exert downside pressure.
• A light calendar emphasizes risk catalysts for fresh impulse, Fedspeak will be important as well.

NZD/USD sellers attack short-term key support around 0.7100 following the heaviest daily fall in three weeks, mainly led by firmer US dollar. That said, the kiwi pair looks for clear direction at the start of Wednesday’s Asian session after a two-day downtrend from a three-month high.

US traders’ return from an extended weekend brought strong greenback as market players relived the virus-led economic fears on the back of Friday’s downbeat US jobs report for August and ISM Services PMI data. Also roiling the mood were chatters over the US stimulus and roadblock for it.

The doubling of the virus-led hospitalizations in a year and a 67% hike in the covid-led deaths in the last two weeks than the previous period portrays the COVID-19 fears in the US. On the contrary, the latest figures from Australia and New Zealand (NZ) have been easing and helped NZ PM Jacinda Ardern to pull the nation off alert level 3, ex-Auckland, to alert level 2.

“As the rest of the country wakes up to a level of normality, Auckland continues to see pockets of Covid popping up in the community - with locations of interest still being released. Four new locations of interest have been released by the Ministry of Health this morning,” said NZ Herald.

It’s worth noting that the fears over the US stimulus add to the downside pressure on the NZD/USD prices. Recently, CNN came out with the news saying, “House Republicans could face increased pressure to vote against a bipartisan infrastructure package when they return to Washington later this month.”

Talking about the data, China’s upbeat trade numbers and New Zealand’s firmer GDT Price Index failed to recall the NZD/USD buyers amid the risk-off mood. That said, the Wall Street benchmarks began the week on a negative note and the US 10-year Treasury yields crossed August highs to mark 5.5 basis points (bps) of an upside to 1.377% by the end of Tuesday’s North American session.

Moving on, a lack of major data/events may restrict the market moves but the qualitative catalysts can keep weighing on the NZD/USD prices, not to forget comments from Fed New York President John C. Williams, if found bullish.

Technical analysis

NZD/USD pair’s pullback from a descending resistance line from February 25, around 0.7145, battles a 13-day-old support line around 0.7100. Also acting as a downside filter is the 100-DMA level of 0.7083.