NZD/USD upside capped below 0.7300 on risk-off, poor China data

Persisting moderate risk-aversion combined with a dip in the Chinese new home prices continue to keep a lid on further recovery in the NZD/USD pair.

NZD/USD stuck below 10-DMA at 0.7299

Having bottomed out near 0.7275 region in early trades, the spot is seen trying hard to take on the recovery above 0.73 handle, but in vain, as negative Asian stocks and oil prices, in the wake of Barcelona ‘terror attack’ induced risk-off, continue to dampen the sentiment around the higher-yielding assets such as the Kiwi.

Moreover, the upside remains capped as the latest new home prices data from China failed to impress markets, and added to the recent weak macro releases from China released over the last two weeks. China is New Zealand’s top trading partner. China home price growth eases in July, slowest since August 2016

However, the NZD/USD pair keeps the recovery mode intact, underpinned by broad USD weakness and yesterday’s upbeat NZ PPI data, which came in at 1.4% in the reported month versus 0.9% expected and 0.8% previous.

Looking ahead, the pair will get influenced by the risk trends and USD dynamics ahead of the US prelim UoM consumer sentiment data and FOMC member Kaplan’s speech due later in the NA session.

NZD/USD Levels to consider                                                                              

NZD/USD holds above 10-DMA below 0.7299, with 0.7282 (5-DMA) still guarding 0.7250 (psychological levels) and a break back below 0.7191 (100-DMA) are key near-term downside areas. To the topside, a test of 0.7348 (50-DMA) due on the cards, which could open doors towards 0.7377 (20-DMA).