NZD/USD struggles at 0.6960 amid risk-off market sentiment

• High energy prices, supply shortages amid other factors dampened the market sentiment, thus weighing on the NZD. 
• Fed’s Clarida commented that he would like the QE’s reduction to conclude by the first half of 2022.
• Among other policymakers, Atlanta’s Fed President Bostic is ready to begin the bond tapering in November.

The NZD/USD pair falls during the New York session, trading at 0.6933, down 0.12% at the time of writing. 

High energy prices, supply shortages, and the ongoing energy crisis, among other factors, weigh on the market sentiment, as witnessed by US stocks falling between 0.02% and 0.09%. Also, some Federal Reserve Members crossed the wires, reinforcing the possibility of the start of the bond tapering process by the Federal Open Market Committee on November’s meeting

In the meantime, the US Dollar Index that measures the US dollar performance against a basket of six peers is aiming higher, almost 0.20%, sits at 94.50. 

In the absence of any New Zealand fundamental catalyst, the US economic docket featured the JOLTS Job Openings for September, which decreased to 10.439M lower than the 10.925M foreseen by economists.

Fed’s Clarida would like to conclude the QE’s reduction by the first half of 2022

Fed speakers have crossed the wires during the New York session. The Federal Reserve Vice-Chairman Richard Clarida said that the bar for taper has all but met concerning the labor market. Moreover added, “if recovery remains on track, gradual tapering of asset purchases concluding middle of next year may soon be warranted.”

Meanwhile, Raphael Bostic, President of the Federal Reserve in Atlanta, said that the slowdown in the US labor market should not derail the Fed’s taper timeline. He said, “[he] would be comfortable starting tapering of asset purchase program in November.”

On the macroeconomic front, on Wednesday, the New Zealand economic docket will feature the REINZ House Price Index (MoM) and the Food Price Index (MoM), both for September.
On the US front, the Consumer Price Index and the last Federal Open Market Committee minutes could offer a fresh catalyst for NZD/USD traders.

NZD/USD Price Forecast: Technical outlook

Daily chart

The NZD/USD spot price is well below the daily moving averages (DMA’s), supporting the downward trend. In the last four days, the pair has unsuccessfully tested the 0.6960 level, retreating on heavy selling pressure, each of the moves below 0.6940. A daily break below 0.6900 could push the pair towards the confluence of a rising slope trendline and the October 6 low at 0.6875. A breach of that level could expose the 2021 lows at 0.6805.

The Relative Strength Index (RSI) is at 44, flattish, suggesting that the pair might consolidate before resuming another leg down, towards 0.6805.