NZD/USD trading at its lowest in two weeks
|- New Bank of Japan Governor Kazuo Ueda spurred US Dollar buying.
- Speculation that the tightening cycle is over weighed on investors' mood.
- NZD/USD is neutral-to-bearish around 0.6220, could extend its slump.
It was not a good start to the week for the New Zealand currency, as it weakened sharply against its American rival. NZD/USD fell to 0.6913 on Monday and trades at around 0.6220 ahead of Tuesday's opening. The Kiwi lost the most during European trading hours despite financial markets in the Old Continent remaining closed due to the Easter Monday Holiday.
The main market driver at the beginning of the week was the Japanese yen, which edged lower following comments from the new Bank of Japan Governor, Kazuo Ueda, replacing Haruhiko Kuroda.
Among other things, Ueda said that he has agreed with Prime Minister Fumio Kishida that there is no immediate need to change the 2013 joint statement with the government. Furthermore, he noted that a small rate hike would not be a big issue for the financial system, quite relevant after a decade of ultra-loose monetary tightening in the country.
The US Dollar benefited from JPY's broad weakness and speculation that most major central banks will soon hit the pause bottom amid the increased risk of a global recession. Central banks had started retrieving monetary support in 2022 to tame inflation, and most of them stand halfway towards their goals. Still, continued tightening has resulted in a banking crisis, while growth has turned sluggish.
Technical Outlook
NZD/USD daily chart offers a neutral stance, although the risk of a bearish continuation has increased. It trades between directionless moving averages, with the 100 SMA providing resistance around 0.6300 and the 200 SMA acting as dynamic support at 0.6160. At the same time, the pair seesaws around an also flat 20 SMA, aiming to end the day below it. Finally, technical indicators hover around their midlines with uneven downward strength, in line with another leg south.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.