The NZD/USD pair has been facing selling pressure for the third consecutive day, with the USD gaining strength against the Kiwi. Mixed Chinese data released on Monday did little to sway bullish sentiment, with Retail Sales growing by 3.7% YoY in May but Fixed Asset Investment and Industrial Production falling short of expectations. This data failed to provide any meaningful impetus to antipodean currencies, including the NZD, as the USD continued to exert pressure on the pair.
The USD Index (DXY) has been trading near its highest level since early May, following the Fed’s hawkish outlook of only one rate cut in 2024. This has led to elevated US Treasury bond yields and acted as a tailwind for the Greenback. The ongoing geopolitical tensions in the Middle East and political uncertainty in Europe have also supported the safe-haven status of the USD, further contributing to the downward pressure on the NZD/USD pair.
The pair opened the week with a modest bearish gap, hovering around the 0.6130-0.6125 region during the Asian session. Despite the release of Chinese macroeconomic data, the NZD failed to see a significant movement. While Retail Sales exceeded expectations, Fixed Asset Investment and Industrial Production fell short, resulting in a lack of bullish momentum for the Kiwi.
Investors are closely monitoring the USD strength against the Kiwi, as the Fed’s hawkish stance and geopolitical uncertainties continue to support the Greenback. The upbeat Chinese Retail Sales data was not enough to offset the overall negative sentiment in the market, contributing to the ongoing selling pressure on the NZD/USD pair.
As the week progresses, market participants will keep a close eye on any developments that could potentially impact the NZD/USD pair. The USD’s strength, driven by the Fed’s hawkish outlook and geopolitical tensions, is likely to continue influencing the pair’s direction in the near term. Traders should remain cautious and monitor key economic events and geopolitical developments that could impact the currency pair’s movements.
