The NZD/USD pair is struggling to attract buyers due to the underlying bullish tone surrounding the USD. Factors such as bets for smaller Fed rate cuts and elevated US bond yields have been boosting the dollar, leading to a lack of demand for the Kiwi. Additionally, a weaker risk tone and dovish RBNZ expectations further contribute to the downside pressure on the NZD/USD pair. Despite a modest recovery in the previous session, the pair remains close to a one-month low as the USD continues to strengthen.
The USD Index (DXY) has been on an uptrend, reaching its highest level since early August, driven by expectations for a less aggressive policy easing by the Federal Reserve. The markets have priced out the possibility of another large Fed rate cut in November, as recent US macro data has indicated a strong economy. Geopolitical risks, political uncertainty in the US, and a risk-off sentiment have also contributed to the strength of the safe-haven dollar. On the other hand, the NZD has been under pressure from expectations of aggressive rate cuts by the RBNZ, further weighing on the NZD/USD pair.
Technically, the NZD/USD pair has broken below the 200-day Simple Moving Average (SMA) and shows a lack of buying interest, indicating a bearish outlook. Any attempted recovery is likely to be met with selling pressure, keeping the pair capped on the upside. Traders are now awaiting the US Existing Home Sales data and a speech by Richmond Fed President Thomas Barkin for potential market-moving events.
In terms of the US Dollar’s performance today, it emerged as the strongest against the Japanese Yen, while showing minor changes against other major currencies such as the Euro, Pound, Canadian Dollar, Australian Dollar, and Swiss Franc. The heat map displayed in the article illustrates the percentage changes of major currencies against each other, with the USD showing varying levels of strength or weakness against different counterparts.
Overall, the NZD/USD pair continues to face challenges amid the broader strength of the USD and bearish factors weighing on the Kiwi. Traders are closely monitoring developments in the US economy and central bank policies for guidance on the future direction of the pair. With technical indicators pointing to a downward bias, any potential recovery in the NZD/USD pair is likely to be limited, as sellers remain in control in the current market environment.
