NZD/USD consolidates weekly losses, holds above 0.6800 for now

• NZD/USD remains on track to post large weekly losses.
• NZD continues to have a difficult time finding demand.
• US Dollar Index stays in the positive territory above 93.60 on Friday.

The NZD/USD pair extended its slide during the Asian trading hours and touched its weakest level since November at 0.6805. Although the pair recovered a portion of its daily losses it was still down 0.3% on the day at 0.6822 at the time of press. On a weekly basis, NZD/USD is losing more than 200 pips.

The data from New Zealand showed on Friday that Credit Card Spending increased by 6.9% on a yearly basis in July, up from 6.3% in June. Nevertheless, this print failed to help the kiwi find demand and the sharp decline witnessed in major Asian equity indexes made it even more difficult for the currency to stage a rebound.

On the other hand, the unabated USD strength is forcing NZD/USD to remain in the negative territory. With US stocks futures pointing to yet another weak opening in Wall Street's main indexes, the US Dollar Index (DXY) is trading at its highest level of 2021 at 93.68, rising 0.12% on the day.

There won't be any high-tier macroeconomic data releases featured in the US economic docket on Friday and NZD/USD is likely to end the week on the back foot.

NZD/USD outlook

ANZ analysts think that NZD/USD will remain under bearish pressure with the Reserve Bank of New Zealand opting out to wait longer to hike its policy rate.

"On the one hand it’s clear that the RBNZ needs to, and probably will, hike soon and that having gone hard early, NZ will likely crush Delta. But on the other hand, Delta is escalating quickly (and likely at a rate few expected) and that’s shaken nerves," analysts noted. "Markets are now pricing in 85bp of hikes by May – that’s shy of the 100bp we expect, but then the risks are quite clearly skewed to less."

Technical levels to watch for