NZD/USD attempting to correct but bears not throwing in the towel yet

• NZD/USD bulls are meeting bears in correction attempts.
• Risk off markets keeps the bird pinned down ahead of the Fed. 

At 0.6263, NZD/USD remains pressured in Asia as the US dollar refuses to give back any more ground than it already has in the early attempts of a correction. The kiwi has ranged traded between 0.6252 and 0.6281 so far in the session on Tuesday. 

The Kiwi, among all currencies risk-related, was thrown under a bus on Monday as the US dollar soared to fresh cycle highs in what was a rout in global markets that saw bond yields surge and key equity indices sink.  

''Markets are still reeling from Friday’s surprise rebound in US inflation; that’s seen a string of forecasters either up their terminal Fed Funds rate assumptions, call for more 50bp hikes or pencil in 75bp hikes (or all three!), and that, in turn, is crushing risk appetite,'' analysts at ANZ Bank said, 

''It’s as simple as that. There’s nothing Kiwi about it; rather it’s all about the USD, which is making (an understandable) comeback amid surging interest rates and its safe-haven appeal amid extreme volatility. Expect ongoing volatility ahead of Thursday’s Fed decision.''

An article by the Wall Street Journal was doing the rounds and added to the volatility in the late Us session with speculation of a 75bps or even a 100bps rate hike at this week's Fed meeting, reported here: Investors weigh the probabilities of three Fed scenarios: A 50bps, 75bps or even a 100bps hike

Domestically, the analysts at ANZ Bank said, ''We (and the Reserve Bank of New Zealand) are forecasting a 7% peak in inflation in Q2, but with global and domestic inflation pressures continuing to rise, risks remain firmly to the upside.''

''If those risks are realised, it could increase the RBNZ’s resolve to continue with the aggressive series of interest rate rises implied by their May OCR forecast.''