- NZD/USD edges lower on Friday and is pressured by a combination of factors.
- Bullish USD and the prevalent risk-off mood weigh on the risk-sensitive kiwi.
- Slightly overbought conditions turn out to be the only factor lending support.
The NZD/USD pair struggles to capitalize on the overnight bounce from the 0.5800 mark, or its lowest level since March 2020 and meets with a fresh supply on Friday. The pair remains on the defensive through the early European session and is currently trading around the 0.5835 region.
Following the previous day's intraday volatile swings, the US dollar regains some positive traction and remains pinned near a two-decade high. This turns out to be a key factor that continues to exert some pressure on the NZD/USD pair. The Fed on Wednesday struck a more hawkish stance and signalled that it will likely undertake more aggressive rate increases to cap inflation. This remains supportive of the ongoing move up in the US Treasury bond yields, which, in turn, is seen underpinning the greenback.
Furthermore, the prevalent risk-off environment offers additional support to the safe-haven buck and contributes to driving flows away from the risk-sensitive kiwi. The market sentiment remains fragile amid worries that rapidly rising borrowing costs will lead to a deeper global economic downturn. Adding to this, China's zero-covid policy and the risk of a further escalation in the Russia-Ukraine conflict have been fueling recession fears, tempering investors' appetite for perceived riskier assets.
That said, slightly oversold technical indicators on the daily chart hold back bearish traders from placing aggressive bets around the NZD/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the downside and any attempted recovery move might still be seen as a selling opportunity. Market participants now look forward to the flash US PMI prints for some impetus ahead of Fed Chair Jerome Powell's speech later during the US session.
Technical levels to watch
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.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.