NZD/USD trades below 0.72 as USD demand returns

NZD/USD pair stays below 0.72 handle as the US dollar recovery continues in Asia despite a big miss on retail sales figure on Friday.

Monetary policy divergence at play

Despite weak retail sales figure, the Fed still is the only central bank in town talking about a rate hike. On the other hand, RBNZ cut rates last week and is expected to do so later in this year as well. The policy divergence is the weighing over the Kiwi dollar.

Given the thin economic calendar in the US the spot remains at the mercy of the overall demand for the US dollars. 

NZD/USD Technical Levels

The spot trades around 0.7185 levels in Asia. A breach of support at 0.7182 (23.6% of 0.6675-0.7339) could yield a move lower to 50-DMA support at 0.7124. A violation there would expose 0.71 handle. On the higher side, resistance is seen at 0.7256 (Aug 2 high) and 0.7339 (last week’s high). A break higher would open doors for 0.75 handle.