NZD / USD struggles near two-week lows just above 0.6950

• The NZD / USD remains under some selling pressure during the first half of the European session.
• Optimistic expectations from the Fed push the USD to fresh three-month highs and act as a headwind for the pair.
• The drop appears to be supported as investors turn cautious ahead of America’s monthly NFP jobs report.

The pair NZD / USD has remained on the defensive during the European session on Friday, hovering around two-week lows just above the 0.6950 region.

The pair has prolonged its recent pullback from near the 0.7100 level and has fallen for the sixth day in a row on Friday. The NZD / USD pair has erased a significant portion of last week’s good recovery gains from annual lows and has come under pressure from strong bullish sentiment around the US dollar.

The markets have been speculating that the Fed will tighten its monetary policy sooner if price pressures continue to intensify. Market expectations were further fueled by Wednesday’s US PMi manufacturing ISM survey, which showed subcomponent prices paid jumped to a record 92.1 in June.

This, in turn, has continued to prop up the USD and it has acted as a headwind for the NZD / USD pair. In fact, the DXY dollar index jumped to fresh three-month highs and did not appear to be affected by declining US Treasury yields. Even the appetite for the prevailing in the stock markets has done little to support the NZD with the highest perceived risk.

That said, investors seemed reluctant to open aggressive positions and might prefer to wait on the sidelines. before monthly US employment data. This seemed to be the only factor that has offered any support and has helped limit any further losses for the NZD / USD pair.

The NFP report could influence the Fed’s monetary policy outlook and play a key role in driving price dynamics around the USD in the near term. This, in turn, would help investors determine the next directional move for the NZD / USD pair.

NZD / USD technical levels