NZD/USD drops to lowest level since May 2009 near 0.5970

• Westpac Consumer Survey in New Zealand dropped to 104.2 in Q1.
• US Dollar Index climbs to 99 area boosted by risk-off flows.
• Coming up: Retail Sales and Industrial Production data from US.

The NZD/USD pair spent the Asian moving sideways above the 0.6050 handle but lost its traction as the USD started to gather strength on unabated flight-to-safety. As of writing, the pair was trading at its lowest level since May 2009 at 0.5970, erasing 1.2% on a daily basis.

DXY rally drags pair lower

The only data from New Zealand on Tuesday showed that the Westpac Consumer Survey slumped to 104.2 in the first quarter from 109.9 to reflect the deteriorating consumer confidence. More importantly, the Reserve Bank of New Zealand's emergency rate cut at the start of the week continues to make it difficult for the NZD to find demand.

Commenting on the NZD's outlook, “with global markets still in turmoil and bond yields lagging, massive QE is coming and the RBNZ won’t likely be comfortable letting the NZD appreciate,” said analysts at ANZ Research.

On the other hand, the US Dollar Index (DXY), which fell initially following the Federal Reserve's 100 basis points rate cut on Monday, is pushing higher boosted by risk-off flows. 

Ahead of the Retail Sales and Industrial Production data from the US, the DXY is up 1.2% on the day at 99.17, keeping the bearish pressure on the pair intact.

Technical levels to watch for