- NZD/USD has dipped back towards weekly lows below 0.6450 where the 21 DMA is offering support for now.
- The pair is eyeing a possible break towards 0.6300 if risk appetite continues to deteriorate/US yields continue to push higher.
- Friday’s US CPI data is the main event of the week for the pair.
The NZD, although not the worst performer on the day (the yen once again takes that crown, as it is affected by the Bank of Japan’s persistent dovish stance), is once again one of the currencies of the G10 that has the worst performance. Rising US government bond yields, with the 10-year yield trading some 6 basis points above the 3.0% level and near multi-week highs, is buoying the dollar broadly.
Meanwhile, while still within this week’s ranges, US stock index futures are trading lower ahead of the open, curbing risk appetite in the forex space. The NZD is considered one of the most risk-sensitive G10 currencies, along with the AUD and NOK.
As a result, the NZD/USD it is trading back south of the 0.6450 level and looking for a test of the weekly lows at 0.6420. For now, the pair’s 21-day moving average near 0.6430 serves as support. But if it breaks below this area and the 0.6400 level, if risk appetite continues to worsen, the pair could quickly drop to the next support zone around 0.6300.
As for the macro data to watch on Wednesday, the US 10-year Treasury yield could weigh on NZD/USD if it triggered a further rise in US yields. Other than that, the calendar seems pretty calm. The main event of the week is this Friday’s US consumer price inflation (CPI) report, which will be viewed in the context of how it affects the Fed’s policy outlook.
Technical levels
Source: Fx Street
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