NZD/USD skids below 0.6620 on progressive rate hike expectations by the Fed

The NZD/USD pair has slipped below last week’s low at 0.6626 after carry-forwarding the weakness observed on Friday. The asset has recorded a sheer downside from the last two trading sessions after failing to sustain above the round level resistance of 0.6780 on multiple attempts. Risk-off market mood has dampened the demand for the risk-perceived assets, and considering the price action, a downward trending move is likely to drag the asset to near yearly lows at 0.6529.

The kiwi has been underperforming against the greenback since the release of the NZ Consumer Price Index (CPI) on Thursday. The yearly NZ CPI landed at 6.9% against the expectation of 7.1% and the previous print of 5.9%. Lower-than-expected inflation print pressured the kiwi but not lowered the odds of more rate hikes from the Reserve Bank of New Zealand (RBNZ). RBNZ Governor Adrian Orr mentioned in his last monetary policy statement that inflation is soaring high and interest rate elevation is the only measure to reduce inflation risks. Therefore, RBNZ policymakers will stick to its hawkish guidance and bring inflation below the targeted rate of 2% sooner.

Meanwhile, higher odds of a rate hike by the Federal Reserve (Fed) are pushing the US dollar index (DXY) toward the north. The DXY is comfortably auctioning above 101.00 and is expected to advance gains as investors are expecting higher Durable Goods Order this week. The monthly Durable Goods Orders are likely to land at 1% against the prior print of -2.1%. Also, investors will shed themselves behind the greenback to combat uncertainty ahead of the Fed’s monetary policy announcement in May.