NZD/USD struggles at 0.7000 amid broad US dollar strength across the board

• The NZD/USD retreats below 0.7000 despite investors’ expectations of an RBNZ rate hike on its next meeting.
• The US Dollar Index trades at year-to-date new highs around 95.92.
• US Retail Sales rose more than expected, topping seven-month highs.

The New Zealand dollar retreats below the 0.7000 figure last touched in the last week, down 0.62%, trading at 0.6997 during the New York session at the time of writing. Positive US macroeconomic data from the US boost the greenback, US T-bond yields barely advance, and major US equity indices edge higher, gaining between 0.43% and  0.78%, in the day.

The US Dollar Index, which tracks the greenback’s performance against a basket of its peers, advances 0.42%, sitting at 95.91, new year-to-date highs, weighing on the NZD/USD pair. The US dollar was boosted by positive comments of St. Louis Fed President Bullard, who will be an FOMC voter in 2022. Further, NZD bulls seem to be unable to hold their ground despite the hawkish monetary policy stance by the Reserve Bank of New Zealand (RBNZ), the first central bank of the G8 to hike rates and is widely expected to do it once more before 2021 end.

US Retail Sales post the biggest gain since March 2021

During the New York session, the US Census Bureau revealed that October’s Retail Sales in the US expanded by 1.7%, better than the 1.4% foreseen by economists. Excluding Autos, retail sales rose by 1.7%, at the same pace as the headline, more than the 1% estimated. 

Further, the retail sales jump showed the resilience of consumers, despite having elevated prices. In fact, the figure is not adjusted for any price changes that reflect the above-mentioned. Receipts at gasoline stations jumped 3.9%, the highest since March of 2021, reflecting how people are paying some of the highest prices in seven years. 

Some minutes later, US Industrial Production for October followed Retail Sales footsteps,  rose by 1.6%, better than the 0.7% expected by economists. 

NZD/USD Price Forecast: Technical outlook

In the daily chart, the NZD/USD pair retreated below the 50 and the 100-day moving averages (DMA’s) which are located above the spot price. Also, the 200-DMA lies on top of them, confirming the downward bias in the near term. Further, a downslope resistance trendline, broken to the upside on October 18, reclaimed its resistance status, lying near the 100-DMA. 

To accelerate the downtrend, NZD/USD bears will need a daily close below 0.7000. In that outcome, the first demand zone would be the October 13 low at 0.6911.

On the flip side, If NZD/USD bulls want to regain control, they will need a daily close above the 50-DMA at 0.7060. In that outcome, the following resistance level would be the 200-DMA at 0.7095.