- NZD/USD is moving lower for the third day in a row and falls to a one-week low on Monday.
- Rising expectations of a 0.50% Fed rate hike lifts US bond yields and continues to benefit the USD.
- Risk aversion weighs on the higher perceived risk NZD and adds to the selling bias in the pair.
The pair NZD/USD remains under pressure at the start of the European session on Monday, hovering around the 0.6625 area, just a few pips above the 1-week low set at 0.6612 earlier in the day.
The pair witnessed some sales for the third day in a row and retreated further from a near three-week high around the 0.6730-0.6735 region hit last Thursday. The Concerns over an impending Russian invasion of Ukraine weighed on global risk sentiment, which was evident by a generally weaker tone around equity markets. This, in turn, was seen as a key factor that benefited the safe-haven US dollar and pushed NZD currency flows away from perceived higher risk.
Aside from this, the dollar was further buoyed by rising expectations of a faster tightening of monetary policy by the Fed, fueled by the hotter-than-expected US CPI report released last week. pass. In fact, the markets have been pricing in the price the possibility of an interest rate hike of 50 basis points in March, which continued to support the rise in US Treasury yields. The fundamental background favors USD bulls and supports the prospects for an extension of the NZD/USD bearish move amid the absence of any relevant economic releases on Monday.
That said, investors could take cues from St. Louis Fed President James Bullard later in the American session. It is worth remembering that Bullard took a more aggressive stance, saying the US central bank should raise interest rates by 100 basis points in the next three meetings.. His comments could influence the price dynamics of the USD. Aside from this, geopolitical developments coupled with broader market risk sentiment should provide some momentum to the NZD/USD pair.
NZD/USD technical levels
Source: Fx Street
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