NZD/USD prints six-week low near 0.6200 as talks of RBNZ vs. Fed divergence revive
- NZD/USD drops for the fourth consecutive day as bears poke January’s low.
- Fears of inflation peak in New Zealand, geopolitical concerns probe RBNZ hawks.
- US data, yields join upbeat Fed talks to keep rate hike concerns on the table and propel US Dollar.
- Risk catalysts can entertain traders ahead of next week’s FOMC Minutes, RBNZ.
NZD/USD bears keep the reins for the fourth consecutive day as the quote drops to the lowest level since early January, following a U-turn from the weekly top on Tuesday. That said, the Kiwi pair sellers attack 0.6220-15 support during early Friday in Europe.
Earlier in Asia, New Zealand Financial Minister Robertson said events will exacerbate a slowdown in the economy and that is evidence that inflation has peaked. The same challenges the hawkish bias surrounding the Reserve Bank of New Zealand (RBNZ) ahead of the next week’s monetary policy meeting.
On the other hand, a slew of US statistics concerning inflation, employment and output push back the Fed’s policy pivot talks and help the Federal Reserve (Fed) officials to suggest higher rates. The fashion could be witnessed in the latest comments from the Fed officials and the FEDWATCH tool, observed via Reuters. That said, Cleveland Fed President Loretta Mester and St. Louis Federal Reserve's James Bullard were the latest to sound the hawkish alarm.
It should be noted that the recent fears of more US-China tussles over the spy balloon and Taiwan also bolster the US Dollar’s safe-haven demand, which in turn weighs on the NZD/USD price. The geopolitical fears have a double impact on the Kiwi pair due to New Zealand’s trade ties with China.
Amid these plays, S&P 500 Futures dropped half a percent intraday to 4,086 while poking the weekly low after falling the most in a month on Thursday. Additionally, the US 10-year Treasury bond yields rise to a fresh high since December 30, 2022, whereas the two-year US Treasury bond also renews its highest levels since November 2022.
Moving ahead, the next week’s monetary policy meeting minutes of the Federal Open Market Committee (FOMC) and the RBNZ Interest Rate Decision will be crucial for the NZD/USD traders to watch for clear directions. Market forecasts suggest another 0.50% rate hike from the RBNZ before teasing the policy pivot.
Technical analysis
NZD/USD pair’s sustained downside break of the previous support line from mid-November 2022, now resistance around 0.6300, keeps the pair bears hopeful. Adding strength to the downside bias are the bearish MACD signals and the lower high formation on the daily chart.
However, a daily closing below a 2.5-month-long support line, currently around 0.6220-15, becomes necessary for the bears to keep the reins, a break of which can highlight the 200-DMA of around 0.6175.