NZD/USD sticks to modest intraday gains, just below 0.6400 amid softer USD

NZD/USD draws support from a combination of factors and edges higher for the second straight day.
A positive risk tone is seen undermining the safe-haven buck and benefitting the risk-sensitive Kiwi.
The Fed’s hawkish outlook should limit the USD losses and cap any meaningful upside for the major.

Haresh Menghani FXStreet

The NZD/USD pair gains traction for the second successive day and maintains its bid tone through the first half of the European session. The pair is currently placed just below the 0.6400 mark and looks to build on Friday's modest rebound from over a one-week low amid some renewed US Dollar selling.

A modest recovery in the risk sentiment - as depicted by a positive tone around the equity markets - is seen undermining the safe-haven USD and acting as a tailwind for the risk-sensitive Kiwi. That said, a combination of factors should help limit the downside for the greenback and keep a lid on any further gains for the NZD/USD pair, at least for the time being.

Despite the easing of strict COVID-19 restrictions in China, a sharp rise in new infections could delay the full reopening of the economy. This, along with the protracted Russia-Ukrain war, might keep a lid on any optimism in the markets. Furthermore, a more hawkish commentary by the Fed last week supports prospects for the emergence of some USD dip-buying.

It is worth recalling that the US central bank stated that it will continue to raise rates to crush inflation and projected at least an additional 75 bps increase in borrowing costs by the end of 2023. This remains supportive of an uptick in the US Treasury bond yields and favours the USD bulls, warranting caution before placing bullish bets around the NZD/USD pair.

In the absence of any major market-moving economic releases from the US, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, the broader risk sentiment could drive demand for the safe-haven greenback and contribute to producing short-term trading opportunities around the NZD/USD pair.

Technical levels to watch

NZD/USD

Overview
Today last price	0.6388
Today Daily Change	0.0003
Today Daily Change %	0.05
Today daily open	0.6385

Trends
Daily SMA20	0.6314
Daily SMA50	0.6025
Daily SMA100	0.6041
Daily SMA200	0.6269

Levels
Previous Daily High	0.6409
Previous Daily Low	0.6333
Previous Weekly High	0.6514
Previous Weekly Low	0.6319
Previous Monthly High	0.6314
Previous Monthly Low	0.5741
Daily Fibonacci 38.2%	0.638
Daily Fibonacci 61.8%	0.6362
Daily Pivot Point S1	0.6342
Daily Pivot Point S2	0.63
Daily Pivot Point S3	0.6266
Daily Pivot Point R1	0.6418
Daily Pivot Point R2	0.6451
Daily Pivot Point R3	0.6494

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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