NZD/USD pares the first weekly gain in four above 0.6300 with eyes on central bankers

• NZD/USD prints mild losses after snapping three-week downtrend.
• Fears surrounding China, Russia and the global recession seem to weigh on the pair.
• Increasing odds of RBNZ’s 0.75% rate hike join downbeat US data to favor buyers.
• US data, central bankers’ comments at the ECB forum will be crucial for fresh directions.

NZD/USD struggles to extend the first weekly gain in four around 0.6315, down 0.10% intraday during the initial hours of Monday’s Asian session. The Kiwi pair cheered the US dollar weakness the last week to convince the buyers but the fears surrounding China, Russia and the global recession seem to weigh on the quote of late.

Reuters came out with the news suggesting that the Bank for International Settlements (BIS) calls for interest rates to be raised "quickly and decisively" to prevent the surge in inflation from turning into something even more problematic.

The news also joins comments from US President Joe Biden urging the Group of Seven (G7) leaders to stay together as leaders target Russian gold and oil price. “At the start of the meeting in the Bavarian Alps, four of the Group of Seven rich nations moved to ban imports of Russian gold to tighten the sanctions squeeze on Moscow and cut off its means of financing the invasion of Ukraine,” said Reuters.

Additionally, the US anticipates strong comments on China from the North Atlantic Treaty Organization (NATO), which in turn weighs on the NZD/USD prices due to New Zealand’s trade ties with Beijing.

Elsewhere, International Monetary Fund (IMF) Managing Director Kristalina Georgieva crossed wires during the weekend while saying, “Further negative shocks would inevitably make US economic situation ‘more difficult’.” The IMF revised down US 2022 GDP forecasts to 2.9% versus 3.7% predicted earlier.

It should be noted that a jump in the US housing numbers and a record low sentiment figures managed to favor the market’s mood and helped Antipodeans during Friday. That said, the US New Home Sales for May, by 10.7% versus April’s revised figures of -12.0%, joined the record low print of the final reading of the University of Michigan's Consumer Sentiment Index for June, to 50.0 from 50.2 initial estimates, also drowned the US dollar on Friday.

Looking forward, the US Durable Goods Orders for May, expected 0.1% versus 0.5% prior, as well as the Pending Home Sales, expected -2.0% versus -3.9% prior, will be important for daily directions. However, Wednesday’s debate of the US and the UK and the European central bankers at the ECB Forum on Central Banking will be a crucial event for the week to note.

Above all, the increasing odds of the Reserve Bank of New Zealand’s (RBNZ) 0.75% rate hike adds strength to the NZD/USD prices.

Technical analysis

Friday’s clear upside break of a three-week-old resistance line, now support around 0.6260, directs NZD/USD buyers towards the 21-DMA hurdle surrounding 0.6375.