NZD/USD: Upside capped below 50-DMA, as risk-off weighs

• Mounting trade war fears spark widespread risk-aversion.
• But losses capped amid weaker USD, USTs.

The NZD/USD pair stalled its two-day rebound in Asia just shy of the 50-DMA barrier located at 0.7285, sending the rates into a phase of upside consolidation heading into the European trading.

NZD/USD: 0.7300 still on sight?

The spot is seen wavering back and forth in a tight range over the last hours, as further upside remains limited by persisting risk-off sentiment, reflected by tumbling Asian stocks, as markets fret about the trade war. The US President Trump announced yesterday that he would impose penalties of 25% on imported steel and 10 percent on aluminum imports. Trump’s move is likely to be met by retaliatory action by the rest of the world, including China.

However, the bulls continue to retain the footing, as risk-off driven flows weighed down on Treasury yields as well, in turn pressurizing the greenback across its main competitors. The USD index drops -0.12% to trade just ahead of the 90 handle.

Moreover, upbeat NZ building consents data combined with Thursday’s solid China Caixin manufacturing PMI report also help keep the losses in check. China's Caixin Manufacturing PMI surprises positively in Feb

Focus now shifts towards the US revised UoM consumer sentiment data due later in the NA session.  Until then, the NZD/USD pair will track the broad market sentiment for fresh trading impetus.

NZD/USD levels to watch

The resistances are aligned at 0.7285 (50-DMA), 0.7300 (round figure) and 0.7320 (classic R2/ Fib R3). On the downside, supports are seen at 0.7257 (5-DMA), 0.7200 (natural support) and 0.7168 (200-DMA).