NZD/USD trades flat below 0.6100 at the start of the week

NZD/USD trades with mild gains, just above its opening price of around 0.6095.
The USD recovered following the sell-off seen on Friday post NFPs.
Eyes on Chinese data on Tuesday.

The NZD/USD traded neutral on Monday, below the 0.6100 level. On the one hand, the USD recovered from rising yields after Friday’s losses, while the NZD trades strong ahead of key Trade Balance data from China on Tuesday.

Markets continue to asses jobs reports from the US released on Friday. Nonfarm Payrolls (NFP) cooled down, leading to a USD sell-off and a decline in US bond yields. It is intriguing why markets disregarded the rise in Average Hourly Earnings so quickly, which may contribute to inflationary pressures. The week’s highlight is the release of inflation data from the US on Thursday, with the headline figure expected to increase to 3.3% (YoY) from the previous 3% in June while the Core measure to decrease to 4.7% YoY from 4.8%.

As a reaction, the US bond yields are showing a mixed performance. The 10-year bond yield trades at 4.09%, seeing 0.79 % gains on the day, while the 2-year yield stands with mild payments at 4.77% and the 5-year yields at 4.17%, seeing a 0.70 % increase, respectively.

As for now, according to the CME FedWatch tool, the odds of a 25 basis point hike remain low for the following September meeting they top out near 30% for the November decision.

On the Kiwi’s side, New Zealand’s economic calendar won’t reveal any high-tier data this week. The highlight will be Chinese data to be reported on the early Asian session on Tuesday, which will impact the Asian block currency depending on its outcome.

NZD/USD levels to watch

Upon analysing the daily chart, a neutral to bearish trend becomes evident for NZD/USD, with the bears gradually taking control. The Relative Strength Index (RSI) turned flat in negative territory, while the Moving Average Convergence (MACD) shows red bars. Additionally, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), pointing towards the prevailing strength of the bears in the larger context and the buyers facing a challenging situation.

Support levels: 0.6080, 0.6060, 0.6050.

Resistance levels: 0.6100, 0.6130, 0.6150.