- NZD/USD attracts some buyers near a technically significant 200-day SMA on Monday.
- Mostly better-than-expected Chinese data lend support amid subdued USD demand.
- The upside seems limited as traders await the crucial Fed decision for a fresh impetus.
The NZD/USD pair finds some support in the vicinity of the very important 200-day Simple Moving Average (SMA) and stages a modest recovery from a one-and-half-week low, around the 0.6080 region touched during the Asian session on Monday. Spot prices stick to a mildly positive bias following the release of Chinese macro data, albeit lack bullish conviction and remain below the 0.6100 round-figure mark.
Data published by the National Bureau of Statistics (NBS) showed that China’s Retail Sales rose 5.5% YoY in February against the 5.2% expected and 7.4% in the previous month. Adding to this, the country’s Industrial Production increased by 7.0% YoY as compared to the 5.0% anticipated and the 6.8% in January, while Fixed Asset Investment grew by 4.2% during the first two months of 2024. This, to a larger extent, overshadows an unexpected rise in China’s unemployment rate to 5.3% in February from 5.1% previous and lends some support to antipodean currencies, including the Kiwi.
Apart from this, subdued US Dollar (USD) price action turns out to be another factor acting as a tailwind for the NZD/USD pair. However, expectations that the Federal Reserve (Fed) will stick to its higher-for-longer interest rates narrative to bring down inflation continue to act as a tailwind for the Greenback and cap gains for the currency pair. Traders might also refrain from placing aggressive directional bets and m,ove to wait on the sidelines ahead of the key central bank event risk – the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday.
The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the NZD/USD pair’s recent pullback from the 0.6215 region, or the monthly peak, has run its course. Nevertheless, spot prices, for now, seem to have snapped a two-day losing streak and remain at the mercy of the USD price dynamics in the absence of any relevant market-moving economic data from the US on Monday.
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