NZD/USD refreshes 7-week lows, nears key ascending trendline

• Risk-off has pushed NZD/USD to multi-week lows below 0.6540.
• The pair may challenge the key ascending trendline if the risk aversion worsens. 
• At press time, futures on the S&P 500 are pointing to risk reset. 

The selling interest around the New Zealand dollar is now picking up the pace and is pushing NZD/USD lower to multi-week lows. 

At press time, the currency pair is trading at 0.6538, the lowest level since Dec. 11, having found acceptance under the previous seven-week low of 0.6542 a few minutes ago. 

Offered on Coronavirus scare

Risk is under pressure with fears dominating markets that China is struggling to contain the deadly Coronavirus. 

Investors are growing increasingly concerned about the economic impact of the fast-spreading coronavirus. This is evident from the decline in the treasury yields and the losses in the equity markets. The US stocks fell by more than 1.5% on Monday and the 10-year yield declined to over three-month lows below 1.6%. 

However, at press time, the futures on the S&P 500 are pointing to mild risk reset with a 0.30% gain. That may help NZD/USD reverse losses during the day ahead. 

The currency pair will likely challenge and breach support of the trendline rising from October and November lows if risk aversion worsens. 

"We expect the RBA and the Fed to cut by more than the RBNZ, however, risk-off sentiment in financial markets is likely to be a counter-balance to the change in interest rate differentials," Westpac analysts wrote in their weekly note. 

Technical levels