NZD/USD fails to take advantage of dollar weakness and falls below the 200 DMA

• The NZD/USD does not take advantage of the improvement in sentiment and falls influenced by a technical indicator.
• The dollar fell while US bond yields rose, a headwind for NZD/USD.
• New Zealand Trade Balance and US Existing Home Sales data are awaited.

The NZD/USD pair reversed course after breaking through the 200-day EMA, falling 0.12%, as Wall Street is about to close. US stocks are about to end the day on a bullish mode, although the New Zealand dollar (NZD) is at the mercy of technical indicators. At the time of writing these lines, the NZD/USD is trading at 0.6248.

NZD/USD Stumbles Against the 200 Day EMA, Despite Risk Appetite

With the imminent US Federal Reserve (Fed) monetary policy meeting, markets could start to go sideways. Although sentiment improved, the NZD was unable to capitalize, with markets focused on Jerome Powell and co. Therefore, the NZD/USD pair pulled back after reaching a daily high of 0.6281.

Last Friday, the latest round of US economic data confirmed the ongoing economic slowdown. Industrial Production fell, Consumer Sentiment deteriorated, as reported by the University of Michigan (UoM), and inflation expectations cooled amid continued turmoil in financial markets.

Traders continued to digest the news that UBS had bought Credit Suisse, which could supposedly curb the bank’s stock-market rampage. However, news reports reported that First Republic Bank shares ground to a halt for the ninth time on the day, plunging 50% at one point before paring the losses, falling 33%.

Meanwhile, the dollar index, a gauge of the value of the dollar against a basket of six currencies, was down 0.53% to 103.312. By contrast, US Treasury yields erased their earlier losses, with the 10-year Treasury yield gaining six basis points to 3,498%.

Apart from this, the New Zealand (NZ) economic calendar will feature the NZ Trade Balance for February, with estimates of NZ$1.45bn, down from the previous reading of NZ$1.954m. Exports for January stood at NZ$5.47 billion, while imports reached NZ$7.42 billion. Another factor that could support the New Zealand dollar is the monetary policy of the Reserve Bank of Australia.

In the US, the agenda will include Existing Home Sales and the start of the Federal Reserve’s Open Market Committee (FOMC) two-day policy meeting.

NZD/USD Technical Levels