NZD/USD seesaws around 0.7050 ahead of China Retail Sales, Industrial Production

• NZD/USD stays firmer above weekly resistance line despite sluggish start to the week.
• Market sentiment dwindles amid softer US data, push for more stimulus.
• New Zealand’s Business NZ PSI, Visitor Arrivals dropped, China data in focus.
• Chatters over US Inflation, RBNZ’s rate hike will be important as well.

NZD/USD struggles to carry Friday’s upbeat performance, taking rounds to 0.7040 following the two consecutive weekly falls. Even so, the kiwi pair keeps the previous day’s upside break of a short-term key resistance line and awaits China data for fresh impulse amid the early Asian session on Monday.

In addition to the wait for China data, mixed catalysts concerning the US inflation and downbeat economics at home also challenge the NZD/USD traders of late.

Recently, New Zealand’s Business NZ PSI for October eased from 46.9 to 44.6 while Visitor Arrival for September dropped from -44.0% to -58.1% YoY in September.

Elsewhere, the weekend comments from US Treasury Secretary Janet Yellen and Federal Reserve Bank of Minneapolis President Neel Kashkari were indirectly favoring the need for more stimulus, taming the concerns over rising inflation. The same could be witnessed by Friday’s University of Michigan Consumer Sentiment Index figures that dropped to the 10-year low, per the provisional figures for November.

“Indeed, with markets still debating the merits of a 25 or 50 bp (basis points) hike, short-end interest rate volatility could easily spill over into the NZD. But once that decision has been made, it’ll lay the foundations for how the summer will unfold,” said the Australia and New Zealand Banking Group (ANZ).

Given the escalating chatters over US stimulus and the recently softer US data challenging the Fed rate hike concerns, the NZD/USD traders may welcome firmer China data to extend the latest technical breakout. However, the bulls should be mindful of the challenges that the Reserve Bank of New Zealand (RBNZ) faces before the next week’s interest rate decision.

Technical analysis

NZD/USD recovery from 61.8% Fibonacci retracement (Fibo.) of late September-October upside managed to cross a one-week-old resistance line, now support around 0.7025.

As the upward sloping RSI and recently positive MACD signals support the stated rebound, further upside towards the 200-SMA level near 0.7065 can’t be ruled out.

However, early November’s lows near 0.7075 and 0.7095, followed by the 0.7100 threshold, will test the pair bulls afterward.

Alternatively, a downside break of the resistance-turned-support line, close to 0.7025, will aim for the 61.8% Fibo. level surrounding 0.6995. Adding to the downside filter is the October 04 swing high near 0.6985-80.

NZD/USD: Four-hour chart

Trend: Further upside expected