NZD/USD drops to its lowest level since November 2022, closer to mid-0.5900s

NZD/USD drifts lower for the fifth successive day and is pressured by a combination of factors.
China's economic woes and the downbeat domestic data weigh on the New Zealand Dollar (NZD).
Bets for more Fed rate hikes continue to underpin the USD and contribute to the ongoing decline.

Haresh Menghani FXStreet

The NZD/USD pair remains under some selling pressure for the fifth successive day and drops to its lowest level since November 2022, closer to mid-0.5900s during the Asian session on Monday.

Growing concerns about the worsening economic conditions in China continue to undermine antipodean currencies, including the New Zealand Dollar (NZD), which loses additional ground in reaction to the downbeat domestic data. In fact, Business NZ's Services Index plunged into contraction territory during July and came in at 47.8 – marking the lowest level since January 2022. Moreover, the previous month's reading was also revised down to 49.6 from 50.1 and pointed to the slowing economy. This, along with the underlying bullish sentiment surrounding the US Dollar (USD), continues to exert downward pressure on the NZD/USD pair.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to its highest level since July 7 and remains supported by expectations that the Federal Reserve (Fed) will stick to its hawkish stance. The bets were reaffirmed by the US PPI on Friday, which climbed slightly more than expected in July. Against the backdrop of a moderate rise in consumer prices in July, the data suggested that the battle to bring inflation back to the Fed's 2% target is far from being won. This keeps the door open for one more 25 bps Fed rate hike in 2023 and remains supportive of a further rise in the US Treasury bond yields, underpinning the USD.

Apart from the aforementioned fundamental backdrop, Friday's sustained breakdown below the 0.6000 psychological mark is seen as another factor that prompts some follow-through technical selling around the NZD/USD pair. This, in turn, suggests that the path of least resistance for spot prices is to the downside. Traders, however, might refrain from placing aggressive bets ahead of the crucial Chinese macro data dump on Tuesday and the Reserve Bank of New Zealand (RBNZ) monetary policy meeting on Wednesday.

Technical levels to watch

NZD/USD

Overview
Today last price	0.5958
Today Daily Change	-0.0026
Today Daily Change %	-0.43
Today daily open	0.5984

Trends
Daily SMA20	0.6153
Daily SMA50	0.6164
Daily SMA100	0.6184
Daily SMA200	0.6233

Levels
Previous Daily High	0.6089
Previous Daily Low	0.5974
Previous Weekly High	0.6118
Previous Weekly Low	0.5974
Previous Monthly High	0.6413
Previous Monthly Low	0.612
Daily Fibonacci 38.2%	0.6018
Daily Fibonacci 61.8%	0.6045
Daily Pivot Point S1	0.5942
Daily Pivot Point S2	0.5901
Daily Pivot Point S3	0.5827
Daily Pivot Point R1	0.6057
Daily Pivot Point R2	0.613
Daily Pivot Point R3	0.6172

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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