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NZD/USD falls to a multi-day low around 0.6250

  • The NZD/USD breaks out of a three-day trading range amid broad-based USD strength.
  • Expectations around the Fed rate hike and risk-off sentiment drive the safe-haven USD and weigh on the perceived riskier NZD.
  • Bond prices look vulnerable to further decline as attention turns to Fed Chairman Jerome Powell’s testimony.

The pair NZD/USD extends the previous day’s rejection decline from the 0.6365-0.6370 resistance zone and sees strong selling on Wednesday. The pair continues to lose ground during the European session and falls to a multi-day low, around 0.6250 in the last hour.

The US dollar was again in demand amid the growing acceptance that the Fed will maintain its aggressive policy of tightening and will raise rates at a faster pace to combat persistent inflation. In fact, the markets have been pricing in another 75 basis point rate hike at the next FOMC meeting in July. This, coupled with a new wave of risk aversion globally, provided an additional boost to the safe-haven dollar and put downward pressure on the perceived riskier NZD.

Market sentiment remains fragile amid doubts that the main central banks can raise interest rates to curb rising inflation without affecting global economic growth. This comes amid global supply chain disruptions caused by the Russia-Ukraine war and the latest COVID-19 outbreak in China, which continued to fuel recession fears. Worsening economic outlook dented global risk sentimentwhich was evident in a new downward movement in the stock markets.

With the last move down, NZD/USD appears to have confirmed a short-term bearish breakout of a three-day trading range and remains vulnerable to further decline. Therefore, a further decline towards the test of the 0.6200 region, or the yearly low hit earlier this month, looks like a distinct possibility. Market participants are now focused on Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee during the American session.

NZD/USD technical levels

NZD/USD

Panorama
Last Price Today 0.6259
Today’s Daily Change -0.0085
Today’s Daily Change % -1.34
Today’s Daily Opening 0.6344
Trends
20 Daily SMA 0.6421
50 Daily SMA 0.6477
100 Daily SMA 0.6638
200 Daily SMA 0.6776
levels
Previous Daily High 0.6364
Previous Daily Minimum 0.6318
Previous Maximum Weekly 0.6396
Previous Weekly Minimum 0.6197
Monthly Prior Maximum 0.6569
Previous Monthly Minimum 0.6217
Daily Fibonacci 38.2% 0.6346
Daily Fibonacci 61.8% 0.6336
Daily Pivot Point S1 0.632
Daily Pivot Point S2 0.6296
Daily Pivot Point S3 0.6274
Daily Pivot Point R1 0.6366
Daily Pivot Point R2 0.6388
Daily Pivot Point R3 0.6412

Source: Fx Street

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