On November 23, the NZD/USD pair remained low at the start of the European session. The pair has dipped 0.32% since the start of the day.
- On Tuesday, the NZD/USD saw significant selling for the third day in a row.
- Weaker NZ Retail Sales figures put pressure on the currency amid continued USD buying.
- The negative pressure was strengthened by acceptance below the 0.7000 level.
NZD/USD fundamental forecast
As the European session begins on Tuesday, the NZD/USD is trading below the 0.70-mark. However, the pair gained a few pips staying just above October 13 low.
The 8.1 % drop in New Zealand retail sales in the September quarter was not as bad as experts had predicted, but it was enough to pressure the local currency. The NZD/USD pair was heavily influenced by this and had a strong positive attitude around the US dollar.
Furthermore, the markets appear to have already factored in another rate rise by the Reserve Bank of New Zealand (RBNZ) at its meeting on Wednesday.
This, in turn, benefits bearish traders and strengthens the case for a continuation of the downward trend.
USD bulls touching new highs
During the early part of today’s trading action, the DXY spiked to its highest level since July 2020 and stayed solidly supported by expectations of a Fed policy tightening sooner rather than later.
Jerome Powell has been nominated for a second term as chairman of the Federal Reserve by President Biden.
The news bolstered betting for rising US interest rates, although the other top contender, Lael Brainard, was seen as the more dovish of the two.
Fed funds futures suggest that a rate rise will be implemented by July 2022, with a strong probability of another hike in November. This caused a big overnight surge in US Treasury bond rates, which positively affected the dollar.
Concerns over the growing number of COVID-19 cases in Europe, as well as the reintroduction of restrictive measures, aided the greenback’s safe-haven position.
Key data releases from NZ
From NZ, we have RBNZ Monetary Policy Statement and official cash rate.
Key data releases from the US
For the US docket, Flash Manufacturing and Services PMI.
Traders may draw cues from the publication of the flash US PMI prints for November later in the early North American session ahead of Wednesday’s considerable central bank event risk.
With US bond rates and overall market risk sentiment, the data will impact USD price dynamics and provide the NZD/USD pair with a boost.
NZD/USD technical analysis red for now
NZD/USD has been trading in red for the past three days. From the start of the day, the pair has lost 0.31% and is staying below the 0.70 psychological level. On the daily chart, the price is below the 100-day MA, and MACD is pointing downwards.
The next resistance for the pair lies around 0.7047, the high on November 19. If the pair manages to cross this level, it can further move towards 0.7064.
On the flip side, the support lies around 0.6911. It’s low on October 13. If the pair further dips, then we can see a movement towards the 0.6895 level.