NZD/USD: Supply caps recovery near 0.7240, Yellen & China trade eyed

NZD/USD’s minor-recovery from three-week lows reached just ahead of 0.72 handle lost legs near 0.7240 region in the overnight trades, now pushing the rate back towards the key support at 0.7200 levels, as risk-off seeped back into the markets amid re-emergence of uncertainty surrounding the US politics.

NZD/USD eyes on China trade data for fresh impetus

The spot continues to trade in the lower bound of the recent trading range, with further downside very much in play, as the sentiment around the NZD remains undermined amid weaker NZ fundamentals and recently released dismal Chinese PMI reports. The Kiwi was the biggest loser in Asia a day before, dumped heavily on weaker-than expected electronic card retail sales data.

China’s Caixin June Services PMI surprises negatively

Chinese June inflation y/y in line with exp, monthly reading a slight miss

Moreover, negative performance on the Asian equities combined with mixed oil markets also add to the renewed weakness seen around the higher-yielding currency – NZD, thereby dragging NZD/USD back into losses. Further, the Asian traders remain cautious amid renewed concerns over Trump’s presidency, following reports of Trump Jr's email contact with the Russian Lawyers.

Looking ahead, the major will continue to get influenced by the broader market sentiment and USD dynamics ahead of the Fed Chair Yellen’s testimony due later in the NA session. Also, the Chinese trade data due on the cards in Asia tomorrow will   have a major impact on the prices.

NZD/USD Levels to consider                                                                              

NZD/USD failed to sustain the recovery near 0.7240, with 0.7200 (key support) still guarding 0.7174 (50-DMA) and a break back below 0.7150 (psychological levels) are key near-term downside areas. To the topside, a test of 0.7256 (5-DMA) still remains on the cards. Beyond which 0.7276/78 (10 & 20-DMA) will be on sight.