NZD / USD remains in negative territory modestly above 0.6900, look at RBNZ

• The NZD / USD pair is suffering heavy losses on Tuesday.
• The US dollar index rises above 93.00 in the US session.
• RBNZ will announce its policy decisions on Wednesday.

The NZD / USD pair fell sharply during Asian trading hours on Tuesday and touched its weakest level in three weeks at 0.6905. With the US dollar gathering strength in the second half of the day, the pair is having a hard time staging a correction and was last seen shedding 1.43% on the day at 0.6916.

Focus shifts to RBNZ

The NZD came under heavy selling pressure after New Zealand Prime Minister Jacinda Ardern announced a three-day nationwide shutdown in light of the community case found in Auckland. This development could force the Reserve Bank of New Zealand (RBNZ), which will announce its monetary policy decisions on Wednesday, to adopt a cautious tone and delay the adjustment.

Anticipating the RBZN event “we now expect the Reserve Bank to put OCR on hold,” Westpac analysts said. “Regardless of the economic case for higher interest rates, there is nothing to be gained by pushing OCR higher now, rather than waiting for more clarity on the covid situation.”

On the other hand, the dollar is capitalizing on safe-haven flows and causing the NZD / USD to stay deep in negative territory. The US Dollar Index is currently up 0.53% on the day at 93.10.

Earlier in the day, data from the United States showed that retail sales declined 1.1% in July. On a positive note, the US Federal Reserve reported that industrial production grew 0.9% in the same period. Later in the session, FOMC President Jerome Powell will host a virtual event with educators and students.

Technical levels to take into account