NZD/USD bears testing 21-D SMA confluence with 25th Nov low

• NZD/USD caught in a bearish trend, rejected by 200-hr SMA on breakup failures. 
• NZD/USD traders will turn to NZ CPI this week.
• How long can the dollar hold up in the face of a prolonged US government shutdown?

Risk rallied on Friday but so too did the dollar, although it has now reached a strong level of resistance on the DXY, where the price has now met and been capped by the 50% retracement Fibo of the mid-Dec decline to YTD lows. 

With the market's attention on the US government shutdown now entering its 29th day when US government workers return from the holiday honouring Martin Luther King Jr. Day, as well as ongoing noise surrounding the Sino/US trade-spat and against a 'Fed on hold" backdrop of sentiment, it's hard to see strong enough cause to keep long of the greenback at this juncture.

Domestic political risks to the dollar

Weekend reports leave the US government shutdown and Sino/US trade tensions up in the air and still very much uncertainty that can continue to weigh on risk sentiment in general. The fundamentals are therefore neutral for the pair without any new recent domestic data from New Zealand to shift the current thinking hat the RBNZ is on hold for the foreseeable future. 

"USD rose into the weekend on excitement about possible trade talk progress, though there’s still a long way to go on that front," analysts at ANZ Bank explained adding, "NZD slid on this cross, but remains in recent ranges. With global concerns still percolating in the background, attention now turns to NZ CPI this week. The mix of inflation matters. But if a zero eventuates as we expect, it could weigh on kiwi, with markets increasingly expecting a more dovish RBNZ"

NZD/USD levels

• Support 0.6650 
• Resistance 0.6860

The price was rejected the 200-hr SMA on two breakup occasions of late and the doji formed on the 14th Jan has played out into a series of lower highs on a daily time frame basis. However, the price is trying to stabilise with a higher low on 17th Jan. However, the price is now testing below the 21-D SMA located at 0.6741 with a confluence of the 25th Nov pivotal low and a break below there will open up 0.6705. A break of the 100-D SMA at 0.6688 with daily closes will sure up the negative bias again, especially on a break back below the 23.6% Fibo.