- NZD/USD moves lower on Friday pressured by a combination of factors.
- A firmer dollar and prevailing risk-off sentiment weigh on the risk-sensitive NZD.
- Oversold conditions turn out to be the only factor lending support to the pair.
The pair NZD/USD has a hard time taking advantage of the previous day’s bounce from the 0.5800 level, or its lowest level since March 2020, and runs into fresh selling on Friday. The pair stays on the defensive during the early European session and is currently trading around the 0.5835 area.
After the intraday fluctuations of the previous day, US dollar regains some positive traction and remains near two-decade highs. This turns out to be a key factor that continues to put some pressure on the NZD/USD pair. On Wednesday, the Fed took a more aggressive stance and signaled that it will likely carry out more aggressive rate hikes to limit inflation. This remains supportive for the current rise in US Treasury yields, which in turn is seen as supportive for the dollar.
Furthermore, the current risk aversion environment offers additional support to the dollar as a safe haven, and helps move money flows away from the risk-sensitive NZD. Market sentiment remains fragile amid concerns that rapidly rising borrowing costs will cause a deeper global economic recession. Additionally, China’s covid-zero policy and the risk of a further escalation of the Russia-Ukraine conflict have fueled recession fears, dampening investors’ appetite for perceived riskier assets.
Having said that, slightly oversold technical indicators on the daily chart prevent bears from opening aggressive positions around NZD/USD. However, the fundamental background suggests that the path of least resistance is down and any recovery attempt could still be seen as a selling opportunity. Market participants are now waiting for the preliminary US PMI figures to gain some momentum ahead of Fed Chairman Jerome Powell’s speech later in the American session.
NZD/USD technical levels
|last price today||0.5836|
|daily change today||-0.0016|
|Today’s daily variation in %||-0.27|
|Daily opening today||0.5852|
|Previous daily high||0.5888|
|Previous Daily Low||0.5804|
|Previous Weekly High||0.6162|
|Previous Weekly Low||0.594|
|Previous Monthly High||0.647|
|Previous Monthly Low||0.6101|
|Daily Fibonacci of 38.2%||0.5856|
|Daily Fibonacci of 61.8%||0.5836|
|Daily Pivot Point S1||0.5808|
|Daily Pivot Point S2||0.5764|
|Daily Pivot Point S3||0.5725|
|Daily Pivot Point R1||0.5892|
|Daily Pivot Point R2||0.5932|
|Daily Pivot Point R3||0.5976|
Source: Fx Street