NZD/USD retreats towards 0.6350 with eyes on Fed Chair Powell

NZD/USD eases from a three-week high, snaps two-day uptrend.
Hawkish Fedspeak, lack of fresh positives from China probe Kiwi bulls.
Powell’s speech will be crucial ahead of Thursday’s US inflation as NZD/USD is susceptible to Fed wagers.

Anil Panchal FXStreet

NZD/USD faded upside momentum after two-day advances, dropping to 0.6370 during early Tuesday’s Asian session. The Kiwi pair rose to the highest level in three weeks as headlines surrounding China, and the US data helped the NZD/USD bulls. However, recent comments from the Fed officials and the cautious mood ahead of this week’s critical data and events seem to challenge the pair buyers.

That said, softer US data concerning the wage growth and ISM Services PMI for December raised speculations that the Federal Reserve (Fed) finally has the upper hand in taming inflation, suggesting a pause to aggressive rate hikes, which in turn propelled NZD/USD prices.

However, hawkish comments from the Fed policymakers challenged the NZD/USD traders. On Monday, Atlanta Federal Reserve bank president Raphael Bostic said it is ''fair to say that the Fed is willing to overshoot.'' On the same line, San Francisco Federal Reserve Bank President Mary Daly stated that they are determined, united, and resolute to bring inflation down.

Additionally, the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation declined to 5% in December from 5.2% prior. Alternatively, the three-year ahead expected inflation remained unchanged at 3% and the five-year ahead expected inflation edged higher to 2.4% from 2.3%.

Amid these plays, the US 10-year Treasury yields dropped five basis points to 3.51% while printing the three-day downtrend, whereas Wall Street closed mixed.

The economic calendar appears light ahead of Thursday’s US Consumer Price Index (CPI) for December. However, today’s Fed Chairman Jerome Powell’s speech will be crucial for the NZD/USD traders to watch for clear directions amid receding hawkish bias for the Fed. Should Powell refrains from conveying hawkish bias, the NZD/USD could refresh the multi-day high.

Technical analysis

Despite the recent pullback, the NZD/USD pair’s capacity to stay beyond the 21-DMA support of 0.6330 keeps buyers hopeful.

Additional important levels

Overview
Today last price	0.6369
Today Daily Change	0.0015
Today Daily Change %	0.24
Today daily open	0.6354

Trends
Daily SMA20	0.633
Daily SMA50	0.6213
Daily SMA100	0.604
Daily SMA200	0.6225

Levels
Previous Daily High	0.6361
Previous Daily Low	0.619
Previous Weekly High	0.6363
Previous Weekly Low	0.619
Previous Monthly High	0.6514
Previous Monthly Low	0.623
Daily Fibonacci 38.2%	0.6296
Daily Fibonacci 61.8%	0.6255
Daily Pivot Point S1	0.6242
Daily Pivot Point S2	0.6131
Daily Pivot Point S3	0.6071
Daily Pivot Point R1	0.6413
Daily Pivot Point R2	0.6473
Daily Pivot Point R3	0.6584

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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