#NZDUSD @ 0.59523 attracts fresh sellers on Monday and drifts back closer to its lowest level since May 2020. (Pivot Orderbook analysis)

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• NZD/USD attracts fresh sellers on Monday and drifts back closer to its lowest level since May 2020.
• Aggressive Fed rate hike bets, the risk-off mood continues to underpin the USD and exert pressure.
• Trades, however, might refrain from placing aggressive bets ahead of the FOMC policy meeting.

The pair currently trades last at 0.59523.

The previous day high was 0.5996 while the previous day low was 0.594. The daily 38.2% Fib levels comes at 0.5975, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.5961, expected to provide resistance.

The NZD/USD pair struggles to capitalize on its modest uptick and meets with a fresh supply near the 0.6000 psychological mark on Monday. The intraday downfall drags spot prices to mid-0.5900s during the early European session, back closer to the lowest level since May 2020 touched on Friday.

A combination of factors assists the US dollar to regain positive traction on the first day of a new week, which, in turn, is seen exerting pressure on the NZD/USD pair. Growing acceptance that the Fed will hike interest rates at a faster pace to tame inflation continues to act as a tailwind for the greenback. Apart from this, the prevalent risk-off environment offers additional support to the safe-haven buck and contributes to driving flows away from the risk-sensitive kiwi.

The market sentiment remains fragile amid worries that the rapid rise in borrowing costs will lead to a deeper global economic downturn. This, along with the economic headwinds stemming from fresh COVID-19 lockdowns in China and the protracted Russia-Ukraine war, has been fueling recession fears. This, in turn, tempers investors’ appetite for riskier assets, which is evident from a generally weaker tone around the equity markets and benefitting traditional safe-haven assets.

The fundamental backdrop seems tilted firmly in favour of bearish traders and suggests that the path of least resistance for the NZD/USD pair is to the downside. Investors, however, might refrain from placing aggressive bets and prefer to move to the sidelines ahead of the two-day FOMC policy meeting, starting on Tuesday. The US central bank is scheduled to announce its decision on Wednesday and is universally expected to deliver at least a 75 bps interest rate increase.

The markets have also been pricing in a small chance of full 100 bps lift-off. Hence, the focus will be on the updated economic projections, the so-called dot plot and Fed Chair Jerome Powell’s remarks at the post-meeting press conference. Investors will look closely look for fresh clues about a more aggressive policy tightening by the US central bank. This will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the NZD/USD pair.

Technical Levels: Supports and Resistances

NZDUSD currently trading at 0.5956 at the time of writing. Pair opened at 0.5983 and is trading with a change of -0.45 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 0.61, 50 SMA 0.6196, 100 SMA @ 0.6275 and 200 SMA @ 0.6524.

The previous day high was 0.5996 while the previous day low was 0.594. The daily 38.2% Fib levels comes at 0.5975, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.5961, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.595, 0.5917, 0.5894
• Pivot resistance is noted at 0.6006, 0.6029, 0.6062

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