- NZD/USD is again failing near the 0.6155-0.6160 bid zone amid renewed USD buying.
- A mixed technical setup requires some caution before placing aggressive directional bets.
- Some subsequent selling below a multi-month low will pave the way for deeper losses.
The NZD/USD pair is encountering fresh supply on the first day of the new week, extending its steady intraday decline through the first half of the European session. Spot prices are falling to the 0.6120 area in the last hour, eroding some of Friday's positive move despite hawkish remarks from Reserve Bank of New Zealand (RBNZ) officials. hawk notes.
Testifying before the Finance and Expenditure Committee on Monday, Governor Adrian Orr stressed that inflation remained high, which is why the RBNZ kept the cash rate at 5.5%. In addition, RBNZ Deputy Governor (Financial Stability) Christian Hawkesby noted that property prices have stabilized over the past six months and the system is equipped to handle high interest rates. However, this does not give the NZD/USD pair any meaningful momentum as they emerge American dollar (USD) purchases, supported by expectations that the Federal Reserve System (Fed) will keep interest rates higher for longer.
From a technical point of view, the drop reconfirms the stiff horizontal barrier near the 0.6155-0.6160 area, which should now act as a key pivot point. Since the oscillators on the daily diagram is struggling to gain any meaningful traction, it will be wise to wait for a sustained break through said hurdle before pouncing on further gains. The NZD/USD pair could then accelerate a positive move towards the 0.6200 round and further rise towards the 0.6225-0.6230 horizontal resistance. The momentum could extend further towards the 0.6250-0.6260 supply zone, which, if cleared, will negate any short-term downside bias.
On the downside, the 0.6100 barrier now appears to be protecting the immediate downside from the all-important 200-day simple moving average (SMA), which is currently tied to the 0.6085 region. Next is the 0.6040-0.6035 region, or the multi-month low touched in February this year. A convincing break below the latter will be seen as a new trigger for bearish traders and pullbacks NZD/USD the pair further towards the psychological mark of 0.6000.