- NZD / USD is down for the fifth day in a row under pressure from a combination of factors.
- COVID-19 woes weigh on risk sentiment and push money flows away from the NZD of higher perceived risk.
- Expectations that the Fed will begin to reduce its buying program soon prop up the USD.
The pair NZD / USD remains under pressure near multi-month lows, although has managed to stay above the 0.6800 level so far during the European session on Friday.
The pair has prolonged the decline of this week’s retracement, from the 0.7045-50 resistance zone, and has been witnessed some sales for the fifth day in a row on Friday. A combination of factors has continued to weigh on investor sentiment, which has been seen as a key factor weighing on demand for the higher perceived risk NZD.
Investors follow concerned that the continued spread of the Delta variant highly contagious coronavirus could lead to a global economic slowdown. Aside from this, expectations that the Fed will begin reversing its pandemic-era stimulus later this year further affected global risk sentiment.
It is worth remembering that the minutes of the last FOMC meeting held on July 27 and 28 convinced investors that The Fed is now comfortable to begin reducing its massive asset purchase program. Monetary policy makers considered that the benchmark of substantial further progress in terms of inflation and maximum employment has been met.
This, in turn, has acted as a tailwind for the US dollar and further contributed to the selling tone surrounding the NZD / USD pair. However, an extremely oversold RSI has prevented the bears from opening new positions and has helped the pair to defend the round level of 0.6800, at least for the time being.
In the absence of big economic releases, speculation that the Fed would be willing to announce the cut at the next meeting in September favors USD bulls. This, coupled with weaker risk sentiment, suggests that the path of least resistance for the NZD / USD pair is to the downside.
NZD / USD technical levels to be observed
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
