NZD/USD slumps to mid-0.71s on disappointing GDT auction outcome

Following a recovery attempt towards the 0.72 handle, the NZD/USD pair came under a renewed selling pressure in the NA session and eased lower to mid-0.71s despite a weakening greenback. As of writing, the pair was trading at 0.7157, losing 0.5% on the day.

Earlier in the day, the pair dropped to a fresh 5-week low at 0.7147 after the positively correlated AUD/USD pair fell sharply amid the RBA's monetary policy statement that noted "the Australian dollar has appreciated since mid-year, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to continued subdued price pressures in the economy. It is also weighing on the outlook for output and employment."

Nevertheless, the critical 200-DMA, which sits around mid-71s, was able to limit the pair's losses and send it back up to the 0.7180 area. Moreover, the US Dollar Index went into a consolidation phase after rising to 93.78 in the early European session and turned negative below 93.50, providing an additional boost to the pair. However, as the results of the Global Daily Trade revealed that the price index contracted by 2.4%, the pair lost its footing and turned south.

Technical outlook

The economic calendar won't be offering any significant data from New Zealand in the Asian session and a daily close above the 200-DMA could allow the pair to recover some of its losses. On the other hand, a decisive break below that level could open the door for further losses towards 0.7100 (psychological level), 0.7055 (Jun. 1 low) and 0.7000 (psychological level). On the flip side, resistances could be seen at 0.7200 (psychological level), 0.7255 (50-DMA) and 0.7295/0.7300 (100-DMA/psychological level). 

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