- NZD/USD is under strong selling pressure and is weighed down by resurgent demand for the USD.
- Lowering expectations for more Fed rate hikes could cap the USD and stop the pair’s losses.
- Investors are now waiting for US macroeconomic data to lift the pair ahead of the Jackson Hole symposium.
NZD/USD finds new selling on Thursday and reverses much of the previous day’s positive move to the 0.5985 zone, or 1-week high. The pair falls to a daily low around 0.5950 during the early part of the European session and for now seems to have stopped this week’s rally from the lowest level since November 2022.
The US dollar (USD) makes a solid comeback after Wednesday’s sharp pullback from a more than two-month high and turns out to be a key factor putting pressure on the NZD/USD pair. Against the backdrop of worsening economic conditions in China, a series of manufacturing surveys released on Wednesday painted a bleak picture of the health of economies around the world. This, in turn, fuels fears of a deeper global economic downturn and drives some safe-haven money flows into the USD.
Meanwhile, preliminary US PMI data also showed business activity in the world’s largest economy approached stagnation point in August and dampened expectations of further tightening by the Federal Reserve (Fed). . This moves the yield on the benchmark 10-year US Treasury note away from its 16-year high. In addition, optimism in the face of signs of easing of trade tensions between the US and China could limit the gains of the Dollar and support the currencies of the antipodes, such as the NZD.
Traders may also refrain from entering aggressive directional positions, preferring to stay out ahead of the Jackson Hole Symposium, where Fed Chairman Jerome Powell’s comments will be scrutinized for clues on the future path of rate hikes. This, in turn, will weigh on the US dollar and give the NZD/USD pair new momentum. Meanwhile, weekly jobless claims and durable goods orders will be posted on the US economic calendar on Thursday.
NZD/USD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
