- The NZD/USD will end the week with a minimal gain of 0.36%.
- Sentiment in currency markets deteriorated on news that US PCE is approaching the 7% threshold.
- NZD/USD Price Analysis: With a neutral bias to the downside and could head towards 0.6100 in the short term.
The NZD/USD retreats from four-week highs around 0.6328, towards the 0.6270 area, amid an upbeat market mood, with global equities rising, despite the favorite inflation gauge The Federal Reserve is approaching the 7% threshold, indicating that further rate hikes are yet to come. However, in the forex space, risk-off sentiment is keeping havens afloat, to the detriment of risk-sensitive currencies like the NZD, with NZD/USD trading at 0.6270 at time of writing. report.
Negative sentiment in the forex space weighed on NZD/USD
NZD/USD felt pressure after the US Commerce Department revealed that Personal Consumption Expenditure (PCE), the Fed’s favorite gauge for inflation, rose 1% MoM and was up 6, 8% YoY versus expectations for a 6.7% increase. The so-called core PCE, which extracts volatile items, increased from the forecast 4.7% to 4.8% year-on-year. The currency reacted lower, falling 100 pips to its daily low of 0.6218, but found offers and pared some of those losses.
Before the open on Wall Street, Atlanta Fed President Raphael Bostic said the Fed “is going to have to do more in terms of interest rate movements.” Bostic said he doesn’t think the country is in a recession, after Thursday’s advanced second-quarter GDP was weaker than estimated at -0.9%.
As for the New Zealand dollar, the absence of an economic calendar during the week left the kiwi adrift on market sentiment and US dollar dynamics.
What must be considered
New Zealand’s economic calendar will include the World Trade Price Index for dairy products, along with employment data and business inflation expectations. In the United States, the calendar will be packed. On Monday, the S&P Global and ISM Manufacturing PMIs will shed some light on the current slowdown in the US economy.
NZD/USD Price Analysis: Technical Outlook
NZD/USD rallied strongly above the 50 day EMA at 0.6305, but the buyers could not hold the level, giving way to the sellers. Although it fell 100 pips to the daily low, the NZD/USD rallied just above the 20-day EMA at 0.6196, maintaining the biggest catch between both moving averages. Therefore, from a daily chart perspective, NZD/USD remains neutral to bearish. Confirmation of the above is that the Relative Strength Index (RSI), which, although still in bullish territory, its slope is turning lower, accelerating for a break below its 7-day RSI SMA.
Source: Fx Street
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