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NZDUSD Dropped to 4-Month Lows on Mixed NZ Data and Concerns About the Coronavirus

NZDUSD
NZDUSD

NZDUSD dropped to its 4-month lows early into today’s trading as data from New Zealand came in mixed and policymakers warned about the coronavirus. The currency pair fell to 0.6282 which is the lowest level it has reached since November 2019.

According to ANZ, business confidence deteriorated in February. Its reading printed at -19.4 which was much lower than December’s reading at -13.2. On the other hand, Statistics New Zealand reported a lower-than-expected trade deficit at 340 million NZD compared to the consensus at -545 million NZD.

Then, New Zealand Finance Minister Robertson made a statement about the coronavirus having a serious impact on the economy in the short-term. He pointed out that the tourism industry is already feeling the effect of travel restrictions. The limited flights between New Zealand and China has already taken its toll on the industry. He then went on to assure that the government can provide support in order to keep growth afloat.

NZDUSD Outlook

On the hourly time frame, we can see that NZDUSD is testing resistance at the falling trend line when you connect the highs of February 25 and February 26.

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If there are enough sellers in the market, we could see the currency pair fall to support around 0.6240 where it previously found support on September 2019. On the other hand, a close above today’s Asian session highs at 0.6296 would invalidate the trend line resistance. It could then mean that NZDUSD maybe on its way to resistance at 0.6355.