NZD/USD Breaks 0.7000, Risk Of More Downsides

Key Highlights

  • NZD/USD started a fresh decline from well above 0.7200 and declined below 0.7000.
  • AUD/USD is also showing bearish signs below the key 0.7680 support.
  • The US Manufacturing PMI increased from 58.6 to 59.0 in March 2021 (Preliminary).
  • The US Gross Domestic Product is likely to grow 4.1% in Q4 2020.

NZD/USD Technical Analysis

After trading as high as 0.7269, the New Zealand Dollar started a fresh decline against the Canadian Dollar. NZD/USD broke the 0.7150 and 0.7100 support levels to move into a bearish zone.

Looking at the 4-hours chart, the pair gained pace below the 0.7080 support level. There was a close below the 0.7050 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair even broke the 0.7000 support zone and it traded close to 0.6950. If there are more losses, there is a risk of a drop towards the 0.6920 and 0.6900 levels.

If there is an upside correction, the previous support near 0.7000 and 0.7020 might prevent gains. The main resistance is now forming near the 0.7100 level (the recent breakdown support).

Fundamentally, the US Manufacturing Purchasing Managers Index (PMI) for March 2021 (Prelim) was released yesterday by the Markit Economics. The market was looking for a rise from 58.6 to 59.3.

The actual result was lower than the forecast, as the US Manufacturing PMI increased to 59.0 in March 2020. Besides, the Services PMI increased from 59.8 to 60.0.

The report added:

Private sector companies across the U.S. registered a further substantial increase in business activity at the end of the first quarter.

Overall, the US Dollar remains in a positive zone and it seems like EUR/USD, GBP/USD, AUD/USD and NZD/USD could struggle to recover in the near term.

Economic Releases

  • US Initial Jobless Claims – Forecast 730K, versus 770K previous.
  • US Gross Domestic Product Q4 2020 – Forecast 4.1% versus previous 4.1%.