Sellers attack 0.7200 amid fresh covid lockdown in New Zealand

NZD/USD kick-starts the week on a back foot amid COVID-19 fears.
NZ PM announced three-day activity restrictions, level 3 lockdown for Auckland, to once again tame the virus outbreak.
New Zealand Business NZ PSI came in 47.9 versus 49.2 prior.
Off in China and the US, greenback weakness placate bears.

NZD/USD holds lower ground near 0.7205, following the week-start gap-down to 0.7213, during the initial Asian session trading on Monday. The kiwi pair’s weakness has more to do with the fresh coronavirus (COVID-19) lockdown in New Zealand (NZ) than the currency’s fundamental weakness and/or the US dollar positions. Even so, the bears are cautious amid a light calendar in Asia and off in China and the US, not to forget the broad US dollar weakness.

NZ PM Ardern seems confident despite the virus outbreak…

Following three COVID-19 cases in Auckland without links to the known infections, New Zealand’s Prime Minister Jacinda Ardern announced a three-day lockdown in the country’s biggest city Auckland. While a level 3 activity restriction is in place for Auckland, the level 2 conditions are called for the rest of New Zealand to tame the first virus spread since late-January. The lockdown conditions are up for review after 24 hours starting from Monday.

While announcing the lockdown, NZ PM Ardern sounded optimistic as saying, “We have stamped out the virus before and we will do it again,” per Reuters. It’s worth mentioning that New Zealand will begin vaccinating five million people to tame the covid infections starting from February 20. The early arrival of the Pfizer-BioNTech vaccine could be spotted for the same.

Despite the virus woes, NZD/USD bears aren’t in full speed as a rally in the Wall Street benchmarks and the US 10-year Treasury yields weigh on the US dollar moves. Also favoring the cautious optimism could be the hopes of the US covid relief stimulus and gradually increasing COVID-19 vaccination drive among the world.

Alternatively, fears of the virus re-infection, as conveyed by the World Health Organization (WHO) join China’s latest trade-punitive measures for New Zealand, while suspending NZ seafood, to weigh on the risks.

Moving on, a lack of major data/events at home can keep the NZD/USD traders extend the latest downbeat mood. Though, any positives from virus, vaccine and US stimulus can’t be ignored.

Technical analysis

NZD/USD traders struggle between a six-week-old resistance line and an upward sloping support line from January 28, respectively around 0.7245 and 0.7170. It should, however, be noted that the 21-day SMA near 0.7190 and the monthly high close to 0.7255 add filters to the kiwi pair’s moves.