NZD/USD remains depressed below mid-0.6100s amid stronger USD, ahead of US PCE Price Index

• NZD/USD edges lower on Friday and remains well within the striking distance of the monthly low.
• A combination of factors lifts the USD to a fresh weekly high and exerts some pressure on the pair.
• The downside remains cushioned as traders move to the sidelines ahead of the US PCE Price Index.

The NZD/USD pair attracts some intraday sellers near the 0.6160 area on Friday and remains on the defensive through the early part of the European session. The pair remains well within the striking distance of its lowest level since March 10 touched earlier this week and is pressured by resurgent US Dollar (USD) demand.

In fact, the USD Index, which tracks the Greenback against a basket of currencies, touches a fresh weekly high and continues to draw support from firming expectations for another 25 bps lift-off at the next FOMC meeting in May. The bets for additional rate hikes by the US central bank were reaffirmed by the US macro data released on Thursday, which indicated persistent inflationary pressures and that the US job market remains healthy despite an economic slowdown.

The Greenback gets an additional boost from the Bank of Japan (BoJ)-inspired sell-off in the Japanese Yen (JPY). Apart from this, a softer risk tone further benefits the safe-haven buck and acts as a headwind for the risk-sensitive Kiwi. The markets, however, have been pricing in a pause in the Fed's rate-hiking cycle after May. This, in turn, is holding back the USD bulls from placing aggressive bets and lending some support to the NZD/USD pair, at least for the time being.

Traders also seem reluctant and remain on the sidelines ahead of Friday's release of the US Core PCE Price Index - the Fed's preferred inflation gauge. The crucial US macro data will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the NZD/USD on the last day of the week. Apart from this, traders will further take cues from the broader risk sentiment to grab short-term opportunities heading into the weekend.

Technical levels to watch