NZD/USD struggles near nine-month lows, bears await a break below 0.6800 mark

The NZD/USD pair remained depressed near multi-month lows, albeit managed to hold its neck above the 0.6800 mark through the early European session.

The pair prolonged this week's retracement slide from the 0.7045-50 supply zone and witnessed some selling for the fifth consecutive session on Friday. A combination of factors continued weighing on investors' sentiment, which was seen as a key factor that undermined demand for the perceived riskier kiwi.

Investors remain worried that the continuous spread of the highly contagious Delta variant of the coronavirus could lead to a global economic slowdown. Apart from this, expectations that the Fed will begin rolling back its pandemic-era stimulus later this year further took its toll on the global risk sentiment.

It is worth recalling that the minutes of the last FOMC meeting held on July 27-28 convinced investors that the Fed is now comfortable to begin tapering its massive asset purchase program. Policymakers thought that the benchmark of substantial further progress has been met in terms of inflation and maximum employment.

This, in turn, acted as a tailwind for the US dollar and further contributed to the offered tone surrounding the NZD/USD pair. However, extremely oversold RSI on hourly charts held bearish traders from placing fresh bets and assisted the pair to defend the 0.6800 round-figure mark, at least for the time being.

In the absence of any major market-moving economic releases, speculations that the Fed would be prepared to announce tapering at the next meeting in September favours the USD bulls. This, along with weaker risk sentiment, suggests that the path of least resistance for the NZD/USD pair is to the downside.

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