• New Zealand dollar under pressure following COVID-19 lockdown
  • Australian dollar tanks after dovish RBA
  • Oil prices edge lower on concerns over oil demand
  • US stocks rally persists following solid quarterly earnings
  • Bitcoin and Ethereum bull run stalls

The New Zealand dollar remains heavily offered for the second day running, with the NZDUSD pair plunging to three-week lows. The pair has extended its slide below the 0.7050 level, hitting lows of 0.6906 at the time of writing.

New Zealand dollar sell-off

A sell-off followed by a close below 0.6900 could trigger a move to 0.6870 level, the next substantial support level.

Daily NZDUSD chart, showing the support that is being tested and a few key resistances.

On the flipside, NZDUSD needs to hold above the 0.6900 level to have any chance of bouncing back.

The sell-off in the NZDUSD has been fuelled by growing worries about the spread of the Delta variant of the Covid-19. The country’s prime minister has announced a snap 3-day nationwide lockdown in view of a community case being detected.

The growing concerns have further been fuelled by disappointing economic data from China which continues to fuel fears of global economic slowdown in the face of COVID-19. Political tension in Afghanistan has only gone to fuel mass exodus from riskier currencies, with traders seeking safety in safe-havens of the US dollar and the Japanese yen.

The focus will be on the Reserve Bank of New Zealand, which is expected to deliver its monetary policy on Wednesday. A dovish statement will only fuel a further sell-off of the NZDUSD. Focus is also on US retail sales data that could influence dollar strength.

AUDUSD sell-off as RBA remains dovish

The Australian dollar is also under immense pressure after a dovish statement from the Reserve Bank of Australia. AUDUSD has since dropped to three weeks low as the dollar continued to gain traction as a safe haven.

After breaking below the 0.7300 level, AUDUSD remains susceptible to further losses to nine-month lows of 0.7253.

AUDUSD daily chart, showing consolidation, broken trendline, and a possible bearish target.

Disappointing Chinese economic data was the catalyst that fuelled a sell-off on Monday. However, it is a dovish statement from the RBA that seems to have accelerated the sell-off. The central bank has already hinted that it is ready to take policy action should the Covid-19 lockdown accelerate economic slowdown.

Oil prices fall on demand concerns

In the commodity market, oil prices remain under pressure for the fourth consecutive day. Prices fell on Tuesday, with Brent Crude going down 0.7% to $69 a barrel as US oil edged lower 0.8% to $66.77a barrel.

Hourly WTI chart, showing market profile analysis, support, resistance, and rising wedge pattern.

The sell-off in the oil market has been fuelled by brewing fears of a slowdown in demand on the spike of Delta variant cases around the world. China has already placed travel curbs expected to affect oil demand. Japan, on its part, has extended the state of emergency in Tokyo with New Zealand on a three-day lockdown.

President Joe Biden urging oil companies to boost production to tackle rising prices in the US has only gone to fuel glut supply concerns seining price slower. The overall sentiment in the oil market is weak.

US stock market rally persists

In the stock market, the upward momentum persisted at the start of the week, with the S&P 500 reaching its 49th record close after gaining 11 points. The Dow Jones also edged higher, gaining 110 points to close at its 35th record high. Tech heavy NASDAQ was the only index under pressure, closing down 0.2%.

Monthly S&P 500 chart, showing the long-term rising channel.

US indices have continued to edge higher in the face of quarterly earnings coming in better than expected. However, fear is slowly gripping the market amid growing concerns about the effects of the Delta variant of COVID-19. The focus is on US retail sales that could paint a clear picture on consumer’s sentiments and influence tapering debate.

Cryptocurrencies rally stalls

In the cryptocurrency market, the upward momentum that began last week appears to have stalled. Bitcoin and Ethereum are struggling to edge higher amid the dollar strengthening across the board.

BTCUSD 4-hour chart, showing RSI that is slowly declining.

BTCUSD has so far found the going tough above the $48,000 level, opting to retreat with ETHUSD also pulling back after a spike to four-month highs of $3,320.