NZD/USD extends slide toward 0.6300 after opening with bearish gap

• Coronavirus fears weigh on NZD at the start of the week.
• Retail Sales in New Zealand rose 0.7% in the fourth quarter.
• US Dollar Index climbs above 99.60 following Friday's sharp drop.

The NZD/USD pair started the week with a 20-pip bearish gap as the risk-sensitive NZD struggled to find demand amid heightening coronavirus fears. After testing the 0.6300 during the European morning, the pair has gone into a consolidation phase and was last seen trading at 0.6312, erasing 0.47% on a daily basis.

Flight to safety intensifies

Although the number of coronavirus infections in China rose at a softer pace over the weekend, the sharp upsurge seen in the number of confirmed cases outside of China revived concerns over a protracted global epidemic.

Reflecting the risk-averse environment, the 10-year US Treasury bond yield is down 5.6% on the day and is most inverted with the 3-month T-bond yield since October. Additionally, major global equity indexes are suffering heavy losses. 

In the meantime, the data published by Statistics New Zealand on Monday revealed that Retail Sales rose 0.7% on a quarterly basis in the fourth quarter after increasing 1.7% in the previous quarter and put additional weight on the NZD's shoulders.

In the second half of the day, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index from the US will be looked upon for fresh impetus. Ahead of these data, the US Dollar Index, which seems to be capitalizing on risk-off flows, is up 0.3% on the day at 99.63.

Technical levels to watch for