Bears in the NZD/USD are on the verge of extending their losses to confront bulls near monthly support.
At month’s end, the Covid spread is driving a bid into the US dollar.
In Tokyo, the NZD/USD remains unchanged as markets consolidate recent US dollar appreciation in the wake of fresh concerns about the spread of the coronavirus in some nations.
NZD/USD is currently trading at 0.6993 and has been moving in a fairly narrow range of 0.6984 to 0.6997.
The price of the bird was just contained in the correction of the latest negative impulse from the 0.7150s, and the bulls have showed little commitment.
Both the Australian and New Zealand dollars have underperformed their G10 counterparts overnight, owing to Australia’s COVID crisis.
The Delta variety has managed to overcome Sydney’s defenses in the last fortnight, and positive cases have risen to over 100 in just one week.
Officials admitted the necessity to place Sydney under lockdown by Friday, June 25. By Monday, however, the issue had spread across the country, with breakouts in four states and territories.
As a result, the US dollar has gained a safe-haven bid, and month-end rebalancing may possibly be at play.
“In terms of local news, Wellington’s return to Level 1 is welcome, as are increased short-end rates. However, ahead of major US data on Friday, we are likely to range trade,” according to ANZ Bank strategists.
While there is a possibility of a negative extension on a daily basis, monthly support should also be considered.
Following the retracement of the latest bearish impulse, the price appears to be on the approach of a downside extension on the daily chart.
However, the price is testing a key monthly support level in the 0.6920s, which could easily see the price reverse to the upside, so selling at support is not ideal.
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