NZD/USD struggles near its lowest since February amid sustained USD buying By HareshMenghani NZDUSD Fed Inflation RiskAversion Currencies
The USD stood tall near the two-year peak amid Fed rate hike bets/elevated US bond yields.The NZD/USD pair remained depressed through the early European session and was last seen trading around the 0.6730-0.6725 region, or its lowest level since late February.
Following an early uptick to the 0.6775 area, the NZD/USD pair met with a fresh supply on Monday and turned lower for the fourth successive day. This also marked the eighth day of a negative move in the previous nine and was sponsored by the underlying bullish sentiment surrounding the US dollar. In fact, the key USD Index stood tall near its highest level since April 2020 and continued drawing support from expectations for a faster policy tightening by the Fed. Apart from this, a fresh leg up in the US Treasury bond yields offered additional support to the already stronger greenback., worries about the continuous rise in inflationary pressures remained supportive of elevated US Treasury bond yields.
This, in turn, took its toll on the global risk sentiment, which was evident from a generally weaker tone around the equity markets. The risk-off mood was seen as another factor that benefitted the greenback's relative safe-haven status and drove flows away from the perceived riskier kiwi. With the latest leg down, the NZD/USD pair has now retreated over 300 pips from the YTD peak, around the 0.7035 zone touched earlier this month. The fundamental backdrop seems tilted firmly in favour of bearish traders and supports prospects for an extension of the recent downward trajectory.