NZD/USD: Struggles below 0.7200, awaits China Retail Sales, Industrial Production

• NZD/USD holds onto late Friday’s recovery moves from 0.7150.
• Markets dribble amid a lack of major data, US Treasury Secretary Yellen’s comments.
• New Zealand’s Business NZ PSI, Visitor Arrivals improved in February and January respectively.
• Reflation fears can keep US dollar strong but China data may offer kiwi bulls positive start to the week.

Despite a dull start to the week’s trading, NZD/USD picks up bids to 0.7185 off-late amid the early Asian session on Monday. Although the recently printed second-tier data from New Zealand (NZ) could be traced for the pair’s mildly positive performance, the kiwi bulls remain cautious ahead of the key data from China. Also contributing to the pair’s strength could be comments from US Treasury Secretary Janet Yellen.

Yellen’s other attempt to reject reflation fears…

During her interview on ABC, US Treasury Secretary Yellen tried to placate bond bears despite conveying hopes of a short-term pick-up in the yields and inflation due to the US stimulus. It should, however, be noted that the policymaker also signaled readiness to use available tools in case needed. Although there wasn’t anything new in these comments, Yellen’s sustained rejection of the reflation fears shouldn’t be ignored.

On the other hand, New Zealand’s Business NZ PSI for February grew past-47.9 to 49.1 in February whereas Visitor Arrivals recovered from -98.9% to -98.7% in January.

It should also be noted that updates from AstraZeneca, conveying no identified threat of blood clotting due to usage of its vaccines, offered extra help to the market sentiment and Antipodeans.

Even so, the bond bears keep the US Treasury yields strong near a one-year high and favors the US dollar ahead of this week’s Federal Open Market Committee (FOMC).

Ahead of that, today’s China Retail Sales and Industrial Production for January can offer intermediate consolidation to the NZD/USD prices, if matching upbeat forecasts. That said, China’s Retail Sales may jump 32% from 4.6% prior, mainly due to the Chinese New Year shopping, while Industrial Production may have rallied 30% versus 7.3% prior.

Technical analysis

Unless breaking below 0.7100 support confluence comprising 100-day SMA and the yearly bottom, NZD/USD can keep trying to regain the previous support line from early December 12, 2020, currently around 0.7230.