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NZD/USD struggles near the lowest level since November 2020

25 January 2022

NZD/USD edged lower for the fourth straight day and was pressured by a combination of factors. The dominant risk-off theme in the markets continued weighing on the perceived riskier kiwi. Rebounding US bond yields, Fed rate hike bets underpinned the USD and added to the selling bias. The NZD/USD pair remained depressed through the early European session and was last seen trading near the 0.6675 region, just a few pips above the lowest level since November 2020 touched on Monday.

The pair struggled to capitalize on the overnight late recovery of around 40 pips from the 0.6660 area and met with a fresh supply on Tuesday amid the dominant risk-off theme in the markets. Rising geopolitical risk over Ukraine, along with concerns that rising borrowing costs could dent the earnings outlook for companies continued weighing on investors' sentiment. This was seen as a key factor that acted as a headwind for the perceived riskier kiwi.

The flight to safety, along with rebounding US Treasury bond yields and expectations for a faster policy tightening by the Fed, continued underpinning the safe-haven US dollar. This was seen as another factor that exerted some pressure on the NZD/USD pair for the fourth successive day. That said, any further downside seems limited as investors might refrain from placing aggressive bets and prefer to wait for the outcome of a two-day FOMC policy meeting.

The markets seem convinced that the US central bank would begin raising interest rates in March and have been pricing in a total of four hikes in 2022. Hence, market players will look for fresh clues about the likely timing of when the Fed will actually start the policy tightening cycle. This, in turn, will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the NZD/USD pair.

In the meantime, traders on Tuesday will take cues from the release of the Conference Board's US Consumer Confidence Index, due later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, will drive the USD demand and produce some meaningful trading opportunities around the NZD/USD pair.




The Kiwi improved
The Kiwi improved

NZDUSD rose after the RBNZ’s decisions but couldn’t keep up. The New Zealand Dollar rose pretty much against the USD in the morning but couldn’t keep the positive momentum later...

13 Apr 2022

NZD/USD moves back above 0.7000 mark
NZD/USD moves back above 0.7000 mark

NZD/USD gained traction for the second successive day and shot to a fresh YTD high on Tuesday. The uncertainty underpinned commodities and benefitted...

5 Apr 2022

NZD/USD to extend its gains toward the 0.70 level
NZD/USD to extend its gains toward the 0.70 level

NZD/USD slid below the 0.69 mark, opening the door for a correction. Still, economists at Westpac expect the kiwi to enjoy further gains towards the 0.70 level...

29 Mar 2022

NZD/USD faces a tough resistance at 0.6875
NZD/USD faces a tough resistance at 0.6875

Extra gains in NZD/USD are likely although there is a strong hurdle around 0.6875, suggested FX Strategists at UOB Group. The strong surge in NZD...

17 Mar 2022

NZD/USD sticks to gain above 0.6700
NZD/USD sticks to gain above 0.6700

NZD/USD regained positive traction on the last day of the week amid a further USD pullback. Hopes for a ceasefire undermined the safe-haven USD and benefitted...

25 Feb 2022

NZD/USD hits one-week high, bulls await sustained strength above 0.6700 mark
NZD/USD hits one-week high, bulls await sustained strength above 0.6700 mark

The NZD/USD pair climbed to a one-week high during the early European session, though struggled to capitalize on the move beyond the 0.6700 round-figure mark...

17 Feb 2022

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