- A combination of factors prompted aggressive selling around NZD/USD on Tuesday.
- Surging US bond yields pushed the USD to over one-month tops and exerted pressure.
- The risk-off impulse collaborated to drive flows away from the perceived riskier kiwi.
The NZD/USD pair continued losing ground through the first half of the European session and dropped to one-month lows, around the 0.6965 region in the last hour.
Following the previous day's brief pause, the NZD/USD pair came under some renewed selling pressure on Tuesday and resumed its recent retracement slide from monthly tops, around the 0.7170 region. The downward trajectory was exclusively sponsored by a broad-based US dollar strength, bolstered by surging US Treasury bond yields and the risk-off impulse in the markets.
The US bond yields have been scaling higher after the Fed last week hinted that it will soon taper its asset purchases. Moreover, the so-called dot plot showed policymakers' inclination to raise interest rates in 2022. The repricing of the likely timing of the Fed's policy tightening pushed the yield on the benchmark 10-year US government bond to the highest level since June 17.
Apart from this, a turnaround in the global risk sentiment further benefitted the greenback's relative safe-haven status and drove flows away from the perceived riskier kiwi. Investors remain worried about China Evergrande Group's unsolved debt crisis. This, along with intensifying energy crisis in Europe and China – amid soaring gas and oil prices – weighed on investors' sentiment.
The ongoing downfall could further be attributed to some technical selling on a sustained break below the key 0.7000 psychological mark. A subsequent slide below the previous monthly swing lows, around the 0.6980 region, might have already set the stage for further losses. Hence, some follow-through weakness, towards the 0.6935-30 support area, remains a distinct possibility.
Market participants now look forward to Fed Chair Jerome Powell's testimony before the Senate Banking Committee. This, along with the release of the Conference Board's Consumer Confidence Index and the US bond yields, will influence the USD price dynamics. Traders would further take cues from the broader market risk sentiment for some short-term opportunities around the NZD/USD pair.
Technical levels to watch
|Today last price||0.6974|
|Today Daily Change||-0.0046|
|Today Daily Change %||-0.66|
|Today daily open||0.702|
|Previous Daily High||0.7034|
|Previous Daily Low||0.699|
|Previous Weekly High||0.7094|
|Previous Weekly Low||0.6982|
|Previous Monthly High||0.7089|
|Previous Monthly Low||0.6805|
|Daily Fibonacci 38.2%||0.7017|
|Daily Fibonacci 61.8%||0.7007|
|Daily Pivot Point S1||0.6995|
|Daily Pivot Point S2||0.6971|
|Daily Pivot Point S3||0.6952|
|Daily Pivot Point R1||0.7039|
|Daily Pivot Point R2||0.7058|
|Daily Pivot Point R3||0.7082|
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.