NZD/USD price action suppressed but COVID-19 risks weigh
Forex News

NZD/USD retreats to mid-0.60s, clings to modest daily gains

  • PBoC lowered its policy rate to 3.85% on Monday.
  • US Dollar Index rebounds above 100 area on risk aversion.
  • Coming up: Chicago Fed’s National Activity Index for March.

The NZD/USD pair started the week on strong footing advanced higher toward the 0.6100 handle as the People’s Bank of China’s rate cut helped China-proxy NZD gather strength against the greenback. With the market sentiment turning sour ahead of the American session, however, the pair lost its traction and erased a portion of its gains. As of writing, the pair was up 0.37% on the day at 0.6047.

On Monday, the PBoC announced that it lowered the one-year loan prime rate to 3.85% from 4.05% and the five-year rate to 4.65% from 4.75% to reassure markets that it will continue to support the economy. Last week, the data from China revealed that the economy contracted by 6.8% on a yearly basis in the first quarter.

DXY rises above 100

On the other hand, the selling pressure surrounding global equity indexes on Monday show that markets have turned risk-averse at the start of the new week. Boosted by risk-off flows, the US Dollar Index (DXY) climbed above the 100 handle and forced the pair to erase its gains. At the moment, the DXY is up 0.33% on the day at 100.05.

Later in the day, the Federal Reserve Bank of Chicago’s National Activity Index will be looked upon for fresh impetus. In the early trading hours of the Asian session on Tuesday, the Business NZ Performance of Services Index data from New Zealand will be released as well.

Technical levels to watch for

 

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