NZD/USD looks set to refresh two-year low around 0.5920 as DXY rebounds ahead of Fed

NZD/USD fades corrective bounce off the lowest level since May 2020.
PBOC inaction, downbeat RBA minutes contrast with hawkish Fed bets to favor Kiwi bears.
Return of full markets amplify cautious mood ahead of the key central bank announcements.
Short-term descending trend line, May 2020 low highlights 0.5920 as the key support.

Anil Panchal FXStreet

NZD/USD takes offers to refresh intraday low around 0.5935 heading into Tuesday’s European session. In doing so, the Kiwi pair drops for the second consecutive day while fading the previous day’s bounce off the 28-month low marked on Monday.

The quote’s latest weakness could be linked to the broad US dollar rebound, as well as the market’s cautious mood ahead of the US Federal Reserve (Fed) monetary policy announcements. Additionally, fears surrounding China and Europe joining downbeat monetary policy meeting minutes from the Reserve Bank of Australia’s (RBA) and People’s Bank of China’s (PBOC) inaction seem to weigh on the NZD/USD prices.

RBA Minutes showed that the policymakers are well prepared for further rate hikes to tame inflation. However, the statements like, “Interest rates have increased quite quickly and were getting closer to normal settings,” seem to weigh on NZD/USD prices of late.

Also, the People’s Bank of China (PBOC) keeps the one-year and five-year Loan Prime Rate (LPR) unchanged at 3.65% and 4.30% respectively, which in turn poured cold water on the face of expectations of a rate cut and weigh on Kiwi prices.

Elsewhere, downbeat US housing numbers and multi-day low of the US inflation expectations, as per the breakeven inflation rate of the St. Louis Federal Reserve (FRED), seem to challenge the US dollar buyers.

Against this backdrop, the S&P 500 Futures fade the previous day’s bounce off a two-month low around 3,920 whereas the US 10-year and 2-year Treasury yields remain sidelined at the highest levels since April 2011 and October 2007 in that order.

Moving on, NZD/USD bears are likely to keep the reins ahead of the Fed’s verdict. However, the pre-event consolidation might allow the quote to pare recent losses.

Technical analysis

A four-month-old descending trend line joins May 2020 bottom to portray 0.5920 as a tough nut to crack for the NZD/USD bears.

Additional important levels

Overview
Today last price	0.5937
Today Daily Change	-0.0022
Today Daily Change %	-0.37%
Today daily open	0.5959

Trends
Daily SMA20	0.6089
Daily SMA50	0.6193
Daily SMA100	0.627
Daily SMA200	0.652

Levels
Previous Daily High	0.6003
Previous Daily Low	0.5929
Previous Weekly High	0.6162
Previous Weekly Low	0.594
Previous Monthly High	0.647
Previous Monthly Low	0.6101
Daily Fibonacci 38.2%	0.5957
Daily Fibonacci 61.8%	0.5975
Daily Pivot Point S1	0.5924
Daily Pivot Point S2	0.589
Daily Pivot Point S3	0.585
Daily Pivot Point R1	0.5998
Daily Pivot Point R2	0.6038
Daily Pivot Point R3	0.6072

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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