NZD/USD remains under pressure below 0.5850, near its lowest level since March 2020

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  • 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.

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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

NZD/USD

Overview
last price today 0.5836
daily change today -0.0016
Today’s daily variation in % -0.27
Daily opening today 0.5852
Trends
daily SMA20 0.6037
daily SMA50 0.6177
daily SMA100 0.6252
daily SMA200 0.6506
levels
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

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Source: Fx Street

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