NZD/USD erases majority of early losses, inches closer to 0.6350

• US Dollar Index slumps to fresh 18-month lows on Monday.
• Eyes on Wall Street after US stocks futures plunged 5% to trigger a halt in trading.
• Coming up on Tuesday: NZ Manufacturing Sales for fourth-quarter.

The NZD/USD pair touched its lowest level since May of 2019 near 0.6000 at the opening as the coronavirus fear and the incredible fall in crude oil prices sent markets into panic mode. With markets calming down a little bit ahead of the American session, the pair erased the majority of its losses and was last seen trading at 0.6335, still down 0.35% on a daily basis.

Eyes on Wall Street

The broad-based USD weakness also seems to be helping the pair stage a decisive rebound. The S&P 500 futures dropped 5% during the Asian trading hours and triggered a halt in trading. The intense flight-to-safety caused the 10-year US Treasury bond yield to plunge more than 40% and forced the greenback to suffer heavy losses against its rivals.

At the moment, the US Dollar Index, which touched a fresh 18-month low of 94.73, seems to have stabilized near the 95 handle with a daily loss of around 1%. 

Investors will be paying close attention to Wall Street opening bell and another bout of panic selling could cause the volatility to surge. During the Asian session on Tuesday, Manufacturing Sales data for the fourth quarter from New Zealand will be released but the pair is unlikely to react to this data in the current market environment.

Technical levels to watch for