NZD/USD buyers recover some ground, but they are not out of the woods

• NZD/USD jumped from six-week lows on Monday, from around 0.6100.
• The Fed’s favorite inflation gauge ticked lower, though Powell disregarded the data, saying that one month’s data is not enough to pause.
• NZD/USD Price Analysis: Remains downward-biased, so a test of the YTD lows around 0.6060 is on the cards.

NZD/USD bounces from 6-week lows, recovering ground during the North American session, amid a risk-off trading session, courtesy of Fed’s Powell hawkish rhetoric, commenting that even with the US economy slowing down, the Fed would keep hiking rates to temper inflation down.

During the day, the NZD/USD opened near the day’s lows, around 0.6100. However, as the US dollar weakened, the New Zealand dollar rose, hitting a daily high at 0.6167k, some 20 pip higher than current price levels. At the time of writing, the NZD/USD is trading at 0.6154,

NZD/USD gains are courtesy of broad US dollar losses. The fall in US 2-year Treasury yields after refreshing 15-year highs spurred some weakness on the greenback, bolstering most G8 currencies against the US dollar, despite the hawkish speech of the US Federal Reserve Chair Jerome Powell at Jackson Hole.

He said that the Fed’s primary goal is to bring inflation down towards its 2% goal even if it spurs slow growth and “pain to households and businesses.” He added that “without price stability,  the economy does not work for anyone.”

Elsewhere, Friday’s US economic data revealed that the core PCE deflator, the Fed’s favorite inflation measure, increased by 0.1% MoM, less than estimated. Nevertheless, the three-month annualized figure is still high, and as Powell welcomed the data, he reiterated that the Fed needs to go into restrictive territory. Later, the UoM consumer sentiment improved to 58.2, reflecting lower gasoline prices.

What to watch

The New Zealand economic calendar will reveal the ANZ Business Confidence for August, estimated at 52. Meanwhile, the US economic docket will feature the US Consumer Confidence, Fed speakers, and the ISM Manufacturing PMI, alongside the US Nonfarm Payrolls report.

NZD/USD Price Analysis: Technical outlook

The NZD/USD daily chart portrays the pair as downward biased. Confirmation of the previously mentioned is that the daily EMAs are above the spot price, the RSI is in negative territory, and successive series of lower highs/lows cement the downtrend. Therefore, the NZD/USD first support would be the 0.6100 figure. Once cleared, the next support would be the YTD Low at 0.6060.