NZD/USD drops to mid-0.6200s, over one-week low amid stronger USD/risk-off

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NZD/USD drops to mid-0.6200s, over one-week low amid stronger USD/risk-off
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NZD/USD drops to mid-0.6200s, over one-week low amid stronger USD/risk-off – by hareshmenghani NZDUSD RBNZ Recession Fed Currencies

Hawkish Fed expectations and elevated US bond yields continue to underpin the greenback.The NZD/USD pair

prolongs its recent sharp retracement slide from over a two-month high set last week and remains under heavy selling pressure for the fourth straight day on Thursday. The downward trajectory drags spot prices to a one-and-half-week low, around the 0.6250-0.6245 region during the early European session.

With the latest leg down, the NZD/USD pair has now reversed nearly 140 pips from the overnight swing high touched after the Reserve Bank of New Zealand announced its policy decision. The implemented a fourth consecutive 50 bps rate hike at its meeting on Wednesday and pointed to the need to bring forward the timing of further rate increases.

From a technical perspective the death cross forming on the weekly chart, by the 50 WMA sliding below the 200 WMA, is a doom monger for the path of future prices. Bar a 180 degree turnaround on Friday, it looks like it will be confirmed by a very bearish candle fix this week. Further declines may be postponed, however, as initially markets may stabilize before a next leg lower. The 50-day SMA is providing temporary support to prices this morning, as is the 61.

A generally weaker tone around the equity markets caused by recession fears is seen as another factor benefitting the safe-haven buck. The fundamental backdrop favours the USD bulls and supports prospects for a further near-term depreciating move for the NZD/USD pair. The US economic docket features the release of the Philly Fed Manufacturing Index, Weekly Initial Jobless Claims and Existing Home Sales - for some impetus later during the early North American session.

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