NZD/USD rises towards the 0.6250 area amid widespread dollar weakness

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  • NZD/USD gains strong positive traction on Tuesday amid fresh selling around the dollar.
  • Less hawkish Fed hike expectations and a positive risk tone weigh on the safe-haven USD.
  • The fundamental background supports the prospects for further bullish movement in the pair.

The pair NZD/USD receives aggressive buying on Tuesday and stops its recent pullback from near the 0.6300 level, a three-month high hit last week. The intraday recovery remains uninterrupted throughout the first half of the European session and lifts the pair back to the 0.6250 region.

The US dollar is struggling to take advantage of the previous day’s strong rebound from the all-important 200-day SMA and is met with fresh selling which in turn provides a nice boost to the NZD/USD pair. A dovish assessment of the November FOMC meeting minutes, released last week, cemented the market expectations for a relatively minor rate hike of 50 basis points, in December. This triggered a further decline in US Treasury yields and continues to weigh on the dollar.

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Apart of this, A modest recovery in global risk sentiment is seen as another factor weighing on the safe-haven USD and benefiting the NZD, sensitive to risk. Investors are optimistic about the speculation that the Chinese government is considering relaxing its strict anti-covid policies. This follows from stable performance in European stock markets, although concerns about a deeper global economic downturn could limit any positive move.

On the other hand, the previous day’s remarks from Fed officials, aggressive in tone, could provide some support for the dollar. It is worth recalling that St. Louis Fed President James Bullard, New York Fed President John Williams, and Fed Vice President Lael Brainard reiterated that more rate hikes were justified to combat inflation. Having said that, record 75 basis point rate hike by the Reserve Bank of New Zealand (RBNZ) last week favors NZD/USD bulls and supports the prospects for further increases in the pair.

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Market participants are now awaiting the release of the US Conference Board Consumer Confidence Index, due later in the American session. This, along with US bond yields and broader market risk sentiment, will weigh on the dollar and provide some lift to the NZD/USD pair. However, attention will remain focused on Fed Chairman Jerome Powell’s speech on Wednesday and important US economic data this week, including Friday’s NFP report.

NZD/USD technical levels

NZD/USD

Overview
Last price today 0.6243
today’s daily change 0.0084
Today’s daily change in % 1.36
today’s daily opening 0.6159
Trends
daily SMA20 0.6058
daily SMA50 0.5847
daily SMA100 0.602
daily SMA200 0.6299
levels
previous daily high 0.6246
previous daily low 0.6155
Previous Weekly High 0.629
previous weekly low 0.6087
Previous Monthly High 0.5874
Previous monthly minimum 0.5512
Daily Fibonacci of 38.2% 0.619
Daily Fibonacci of 61.8% 0.6211
Daily Pivot Point S1 0.6128
Daily Pivot Point S2 0.6096
Daily Pivot Point S3 0.6037
Daily Pivot Point R1 0.6219
Daily Pivot Point R2 0.6278
Daily Pivot Point R3 0.631

Source: Fx Street

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