FxWirePro: NZD/USD erases early gains, kiwi fails to capitalize on upbeat retail sales data

NZD/USD chart - Trading View 

NZD/USD was trading 0.07% higher on the day at 0.7166 at around 03:35 GMT, slipping lower from session highs at 0.7179.

Data released by Statistics New Zealand on Monday showed New Zealand's Retail Sales was a big beat on expectations. 

New Zealand retail sales climbed a seasonally adjusted 2.5 percent on quarter in Q1 2021, beating forecasts at -4.4% and followed an upwardly revised 2.6 percent contraction in the three months prior.

Retail sales data is a key input for Gross Domestic Product and there is not much room for the Reserve Bank of New Zealand to be much more dovish and on such data.

Meanwhile, New Zealand Institute of Economic Research's (NZIER’s) Shadow Board sees stronger case for tightening in the upcoming May meeting. 

Pointing to some uncertainty over sustainable recovery, particularly in light of continued border restrictions, members saw a cautious approach as justified for the upcoming meeting.

Major Support Levels: 

S1: 0.7125 (Lower BB)

S2: 0.7112 (110-EMA)

S3: 0.7097 (Cloud base)

Major Resistance Levels: 

R1: 0.7167 (55-EMA)

R2: 0.7186 (5-DMA)

R3: 0.7198 (200-month MA)

Summary: NZD/USD struggles at 200-month MA and bias is tilting bearish. Price action hovers around 55-EMA with scope for dip till cloud base at 0.7097. Break below cloud will see test of trendline support at 0.7065. Focus on RBNZ monetary policy meeting due Wednesday for impetus.