- The NZD / USD loses ground for the third day in a row and extends this week’s retracement slide.
- Risk-off sentiment benefits the USD as a safe haven and weighs on the higher perceived risk NZD.
- The focus of the market will continue to be on the US CPI report for April, which will be published at the beginning of the American session today.
The pair NZD / USD extends its downward movement and remains under pressure in the zone of daily lows around the region of 0.7220.
The pair has witnessed a strong sell during the first half of trading action on Wednesday and has extended this week’s pullback from the two-and-a-half-month highs, at levels just above 0.7300. Today’s movement marks the third consecutive day falls and is due to the prevailing climate of risk aversion, which tends to drive away the monetary flows from the NZD of higher perceived risk.
Global risk sentiment has taken a hit amid a dramatic escalation of conflict between Israel and Palestinian militant group, sparked by riots at the Al-Aqsa Mosque complex, Jerusalem’s flashpoint. Israel and Hamas exchanged heavy gunfire on Tuesday, killing at least 35 Palestinians in Gaza and turning Gaza into the most violent confrontation between the two staunch enemies since 2014.
To this It is joined by concerns that mounting inflationary pressure will force the Fed to raise rates earlier than expected., further undermining investor confidence. The focus of the market’s attention will be on the latest US consumer inflation figures, which will be released later at the start of the American session. Headline CPI is expected to accelerate to 3.6% YoY in April.
Meanwhile, the global flight to safety has sparked some short coverage around the safe-haven US dollar. This has been seen as another factor that has contributed to the intraday decline of the pair. Now it will be interesting to see if the NZD / USD pair is able to attract new purchases at lower levels or if the current pullback marks the end of the multi-week upward move.
NZD / USD technical levels