NZD/USD Hovers Near November 2022 Lows at 0.5865-60

The NZD/USD pair is currently facing a tough challenge during the Asian trading session. It’s hovering around a level between 0.5865 and 0.5860, marking its lowest point since way back in November 2022. The main culprit behind this struggle is the strong US Dollar (USD), and the Federal Reserve (often referred to as the Fed) isn’t showing any signs of lowering interest rates anytime soon. This weighty situation has put significant pressure on the NZD/USD pair.

Recent positive news about the US economy has added to the pressure. A key indicator called the US ISM Non-Manufacturing PMI, which measures the health of service-based businesses like restaurants and stores, reached its highest level since February. This signals that the US economy is performing quite well. This positive news has led many to believe that the Fed might increase interest rates again this year. When the Fed does that, it’s generally good news for the US Dollar.

However, investors are growing increasingly concerned about a couple of factors. When interest rates rise, it can become more expensive for individuals and businesses to borrow money, potentially slowing down the economy. Moreover, there’s unease surrounding China’s economic slowdown. These concerns have collectively dampened the appetite for riskier assets, including the New Zealand Dollar, which is often affectionately called the Kiwi.

So, what’s the outlook for the NZD/USD pair? At present, it seems like it may continue its downward trajectory. Nevertheless, it’s important to note that the Relative Strength Index (RSI) on the daily chart is on the brink of entering oversold territory. This suggests that the pair might have gone down too far and too fast, potentially setting the stage for a rebound. Yet, it would be prudent to wait for some stabilization in the market before contemplating further downward movement.

Traders will closely monitor a few key indicators. Firstly, they will keep a watchful eye on the release of the Weekly Initial Jobless Claims data from the US. This data provides insights into how many people are applying for unemployment benefits, offering an indication of the job market’s health. Additionally, significant members of the Federal Open Market Committee (FOMC), which plays a crucial role in shaping US monetary policy, will be giving speeches. Lastly, US bond yields, which signify how much interest investors can earn from government bonds, will be tracked closely. All of these factors can influence the value of the US Dollar and potentially create short-term trading opportunities. So, traders will remain attentive to broader market sentiment to identify additional trading prospects.