NZD/USD remains depressed below mid-0.6400s, hangs near its lowest level since June 2020

• NZD/USD witnessed some follow-through selling for the eighth successive day on Monday.
• Aggressive Fed rate hike bets continued underpinning the USD and exerted some pressure.
• Investors now await NZ jobs data, FOMC decision, NFP report before placing directional bets.

The NZD/USD pair maintained its offered tone through the early European session and was seen trading around the 0.6435-0.6440 region, down nearly 0.40% for the day.

The pair prolonged its descending trend witnessed over the past one month or so and continued losing ground for the eighth successive day on Monday. The downward trajectory dragged spot prices to the lowest level since June 2020 and was sponsored by the prevalent strong bullish sentiment surrounding the US dollar.

Investors seem convinced that the Fed would adopt a more aggressive policy to curb soaring inflation. The bets were reaffirmed by Friday's release of the March Personal Consumption Expenditure (PCE) Price Index, which remained supportive of elevated US Treasury bond yields and continued underpinning the greenback.

That said, a generally positive tone around the equity markets acted as a headwind for the safe-haven buck and extended some support to the perceived riskier kiwi. Traders also seemed reluctant to place aggressive directional bets and preferred to wait on the sidelines ahead of this week's key event/data risks.

New Zealand employment report for the first quarter of 2022 is scheduled for release during the Asian session on Wednesday. The focus, however, will remain on the outcome of a two-day FOMC monetary policy meeting, where the US central bank is expected to hike interest rates by 50 bps and 
announce balance sheet normalization.

Apart from this, the closely watched US monthly jobs report - popularly known as NFP on Friday - will be looked upon to determine the next leg of a directional move for the NZD/USD pair. In the meantime, traders on Monday will take cues from the US ISM Manufacturing PMI for some impetus later during the North American session.

Technical levels to watch