NZD/USD remains on the defensive, holds above 0.6200 mark ahead of FOMC minutes

NZD/USD struggles near monthly low despite a hawkish RBNZ rate hike on Wednesday.
The prospects for further policy tightening by the Fed underpins the USD and caps gains.
Recession fears also benefit the buck and act as a headwind for the risk-sensitive Kiwi.
Traders now await the release of the FOMC meeting minutes before placing fresh bets.

Haresh Menghani FXStreet

The NZD/USD pair struggles to capitalize on its modest intraday uptick and attracts fresh sellers in the vicinity of mid-0.6200s on Wednesday. The pair is currently placed just a few pips above the 0.6200 mark, or its lowest level since January 6 touched last Friday, and a technically significant 200-day Simple Moving Average (SMA).

The prospect of further policy tightening by the Fed keeps the US Dollar pinned near a multi-week top, which, in turn, is seen as a key factor acting as a headwind for the NZD/USD pair. In fact, the markets seem convinced that the US central bank will stick to its hawkish stance and have been pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May. The bets were further lifted by strong US PMI prints on Tuesday, which showed that business activity unexpectedly rebounded to an eight-month high in February.

This comes on the back of the upbeat US macro data, which pointed to an economy that remains resilient despite rising borrowing costs. Adding to this, the US CPI and PPI data released last week showed that inflation isn't coming down quite as fast as hoped. Moreover, several FOMC members, including Fed Chair Jerome Powell, recently stressed the need to keep lifting rates gradually to fully gain control of inflation. This remains supportive of elevated US Treasury bond yields, which, along with a softer risk tone, underpins the safe-haven buck.

The market sentiment remains fragile amid worries about an impending global recession. Apart from this, geopolitical tensions weigh on investors' sentiment and drive flows away from the risk-sensitive Kiwi. The aforementioned fundamental factors, to a larger extent, overshadow a hawkish rate hike from the Reserve Bank of New Zealand (RBNZ) earlier this Wednesday. This, in turn, suggests that the path of least resistance for the NZD/USD pair is to the downside, though a convincing break below the 200-day SMA is needed to confirm the bearish outlook.

Technical levels to watch

NZD/USD

Overview
Today last price	0.6216
Today Daily Change	0.0007
Today Daily Change %	0.11
Today daily open	0.6209

Trends
Daily SMA20	0.6361
Daily SMA50	0.6359
Daily SMA100	0.617
Daily SMA200	0.6186

Levels
Previous Daily High	0.6262
Previous Daily Low	0.6203
Previous Weekly High	0.6391
Previous Weekly Low	0.6193
Previous Monthly High	0.6531
Previous Monthly Low	0.619
Daily Fibonacci 38.2%	0.6225
Daily Fibonacci 61.8%	0.6239
Daily Pivot Point S1	0.6187
Daily Pivot Point S2	0.6165
Daily Pivot Point S3	0.6128
Daily Pivot Point R1	0.6247
Daily Pivot Point R2	0.6284
Daily Pivot Point R3	0.6306

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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