NZD/USD pares intraday gains ahead of US PMIs.

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  • NZD/USD attracts some intraday sellers amid a modest bounce from a multi-month low.
  • Recession fears weigh on risk sentiment and benefit the safe-haven dollar.
  • Bets on lower Fed rate hikes drag down US bond yields and limit dollar gains.
  • Traders are eyeing the US PMI indices for some momentum ahead of New Zealand’s quarterly CPI report on Wednesday.

The NZD/USD pair continues to struggle to break above the key psychological 0.6500 level and is back more than 50 pips from the multi-day high reached on Tuesday. The pair returned to the lower end of the daily range, around the 0.6480-0.6475 region, ahead of the North American session, although it seems unlikely that there will be a significant decline.

Concerns about a deeper global economic recession dampen market optimism, which is evident in the further decline in equity markets. This, in turn, helps the safe-haven dollar to recover modestly from its nine-month low and draws some flows away from the risk-sensitive kiwi. That being said, the prospect of less aggressive monetary policy tightening by the Federal Reserve could limit the greenback’s rise and provide support for the NZD/USD pair.

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Investors seem convinced that the US central bank will soften its hawkish stance on signs of easing inflationary pressures. In fact, markets are anticipating a 25 basis point rate hike at the end of next week’s policy meeting. This, in turn, puts some downward pressure on US Treasury yields and could continue to weigh on the dollar. Traders also seem reluctant to make aggressive bets ahead of this week’s important macroeconomic data.

New Zealand’s quarterly consumer inflation report will be released early in the Asian session on Wednesday. This will be followed by the release of the fourth quarter GDP preview and the underlying US PCE price index on Thursday and Friday, respectively. However, attention will remain focused on the expected FOMC monetary policy decision. This will play a key role in boosting the USD in the short term and will help determine the short-term path for the NZD/USD pair.

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Meanwhile, the PMI and Richmond Manufacturing Index will be released on Tuesday. Apart from this, US bond yields and risk sentiment in general will influence USD price dynamics and provide a significant boost to the NZD/USD pair. However, the fundamental backdrop still looks tilted in favor of bullish traders, suggesting that any significant pullback could be seen as a buying opportunity.

Technical levels to watch


Last price today 0.6478
Today Change Daily -0.0009
Today Daily Variation % -0.14
today’s daily opening 0.6487
daily SMA20 0.636
daily SMA50 0.6318
daily SMA100 0.6068
daily SMA200 0.6199
previous daily high 0.65
previous daily low 0.6437
Previous Weekly High 0.6531
previous weekly low 0.6361
Previous Monthly High 0.6514
Previous monthly minimum 0.623
Fibonacci daily 38.2 0.6476
Fibonacci 61.8% daily 0.6461
Daily turning point S1 0.6449
S2 daily turning point 0.6412
S3 daily pivot point 0.6386
Daily turning point R1 0.6512
Daily Turn Point R2 0.6538
Daily Turn Point R3 0.6575

Source: Fx Street

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