- NZD/USD is under pressure and returns below 0.6350 as global equities move lower as traders digest the Fed’s hawkish rhetoric.
- Amid the lack of major economic events for the rest of the week, the broader risk appetite will drive price action.
The slump in global equity markets as traders digest aggressive comments from Fed Chairman Jerome Powell on Tuesday is weighing on the risk-sensitive kiwi on Wednesday, and the NZD/USD it has become lower as a result. The pair was trading just below 0.6350, down around 0.2% on the day, having failed for the second session in a row to break past Wednesday’s highs around 0.6380.
A quiet economic calendar for the rest of the week, with a few US Tier 2 data releases, New Zealand’s first quarter producer price inflation and New Zealand’s annual budget release (both on Thursday ), means NZD/USD will likely continue to take the tail off of risk sentiment. Concern about hawkish central banks at a time when global growth expectations are being revised down suggests risk assets are unlikely to rise substantially before the week is out.
From a technical point of view, the NZD/USD pair appears to still be stuck in the downtrend that has been in play since early April. Since then, the pair has posted a series of lower lows followed by lower highs. Therefore, short-term speculators could be selling the pair at current levels in the hope that it will retest last week’s lows just above 0.6200. A break below this level would open the door for a run towards the important psychological level of 0.6000.
Technical levels
Source: Fx Street
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