NZD/USD refreshes daily high, inches back closer to mid-0.6100s amid weaker USD
12.09.2022, 07:03

NZD/USD refreshes daily high, inches back closer to mid-0.6100s amid weaker USD

  • NZD/USD catches fresh bids on Monday amid the prevalent USD selling bias.
  • A positive risk tone keeps the safe-haven USD depressed near the monthly low.
  • Recession fears might cap the risk-sensitive kiwi ahead of the US CPI on Tuesday.

The NZD/USD pair attracts some dip-buying near the 0.6080 region on Monday and climb to a fresh daily peak during the early European session. The pair is currently placed around the 0.6135-0.6140 region and moves back closer to over a one-week high touched on Friday.

The US dollar struggles to gain any meaningful traction and languishes near the monthly low, which, in turn, is seen as a key factor lending some support to the NZD/USD pair. The markets already seem to have priced in a supersized 75 bps rate hike at the next FOMC policy meeting on September 20-21. Apart from this, a positive risk tone continues to undermine the safe-haven greenback and benefits the risk-sensitive kiwi.

The upside potential, however, seems limited amid worries about a deeper global economic downturn. The prospects for rapid interest rate hikes, along with economic headwinds stemming from fresh COVID-19 curbs in China and the protracted Russia-Ukraine war, have been fueling recession fears. This might keep a lid on any optimistic move in the markets and act as a headwind for the NZD/USD pair, warranting caution for bulls.

Traders might also prefer to move to the sidelines and wait for the release of the latest US consumer inflation figures on Tuesday. The crucial US CPI report will play a key role in influencing the Fed's policy outlook and driving the USD in the near term. This, in turn, should provide a fresh directional impetus to the NZD/USD pair.

In the meantime, spot prices seem more likely to oscillate in a range amid absent relevant market-moving economic releases from the US. That said, the broader market risk sentiment could drive the USD price dynamics and allow traders to grab short-term opportunities around the NZD/USD pair.

Technical levels to watch

 

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