NZD/USD struggles to capitalize on modest intraday gains, remains below mid-0.6300s, bearish insignia – Crypto News – Crypto News
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NZD/USD re-tested YTD lows around 0.6060 post-upbeat US economic data, ahead of NFP NZD/USD re-tested YTD lows around 0.6060 post-upbeat US economic data, ahead of NFP

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NZD/USD struggles to capitalize on modest intraday gains, remains below mid-0.6300s, bearish insignia – Crypto News

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  • NZD/USD rebounds over 50 pips from the daily low amid the emergence of some USD selling.
  • A modest recovery in the risk sentiment weighs the buck and benefits the risk-sensitive Kiwi.
  • Hawkish Fed expectations, recession fears should limit the USD downside and cap the major.
  • Bearish short-term technical signals further suggest the possibility of more downside.

The NZD/USD pair attracted some buyers near the 0.6290 area on Monday and climbed to a fresh daily high during the first half of the European session. The pair is currently placed just below the mid-0.6300s, though remains well within a familiar trading band held over the past week or so.

The US Dollar fails to capitalize on its modest intraday gains and turns out to be a key factor lending some support to the NZD/USD pair. A softer tone surrounding the US Treasury bond yields acts as a headwind for the Greenback. Apart from this, an intraday recovery in the US equity markets further undermines the safe-haven buck and benefits the risk-sensitive kiwi,

That said, worries about a deeper global economic downturn should keep a lid on any optimism in the markets. Apart from this, the prospects for further policy tightening by the Fed could help limit any meaningful downside for the USD and cap the upside for the NZD/USD pair. This, in turn, warrants some caution for bulls and before positioning for further gains.

Investors now seem convinced that the Fed will stick to its hawkish stance. The bets were reaffirmed by the Labor Department’s annual revisions of CPI, which showed that consumer prices rose in December instead of falling as previously estimated. Separately, the University of Michigan survey’s one-year inflation expectations climbed to 4.2% in February from the previous 3.9%.

This raises the risk of a higher inflation print for January and dashes hopes for an imminent pause in the Fed’s rate-hiking cycle. Hence, the market focus will remain glued to the crucial US CPI report on Tuesday. Heading into the key data risk, traders might refrain from placing aggressive bets around the NZD/USD pair in the absence of relevant economic data on Monday.

From a technical perspective the pair’s steep sell-off from the over six-month high established at the start of the month may have described a three-black-crows Japanese candlestick reversal pattern which augurs bearish for the future. Furthermore, the narrow sideways price action since the low established on February 6 suggests a possible bear flag or pennant formation is in the process of completing, with further downside expected once it breaks. A likely target for any sell-off would be the 200-day Simple Moving Average (SMA) situated at 0.6185, which also corresponds roughly to the length of the flagpole extrapolated lower, the usual method for determining bear flag targets, that said, The medium-term trend is still technically up, so sellers should act with caution when trading counter to the trend. A break below 0.6191, however, would place the uptrend in doubt.

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