NZD/USD edges lower amid a volatile Tuesday’s session, hovers around 0.6816

• The NZD modestly falls amid risk-off market sentiment and Fed’s Chair Powell hawkish comments.
• The market sentiment is downbeat, as Moderna’s CEO said that current vaccines would not be effective against the omicron variant.
• NZD/USD found strong resistance at the confluence of the 50-hour SMA and the daily central pivot point.

The NZD/USD is barely down during the day, fluctuating between gaining and losing amid risk-on and then the risk-off market sentiment, trading at 0.6816 at the time of writing. In the overnight session, the comments of Moderna’s CEO said that current vaccines would not be effective against the last week’s discovered omicron strain, dampening the market sentiment, as the NZD, a risk-sensitive currency, dropped to 0.6789 but bounced off those lows later.

Fed’s Chair Jerome Powell said that inflation can no longer be considered “transitory”

That said, it seemed that the NZD/USD was poised for further upside, but then Fed’s Chair Jerome Powell crossed the wires, triggering an 80 pip drop in the pair, from 0.6850s, down to 0.6772. 

On Tuesday, at a hearing at the US Senate Committee on Banking and Housing, Jerome Powell said that inflation could no longer be considered “transitory.” He added that the COVID-19 recent strain, the omicron poses “downside risks to employment, economic activity and increasing uncertainty for inflation.”

Fed’s Chair Powell added that higher prices are related to supply-demand issues, reiterating that price increases have spread more broadly. He further noted that the risk of higher inflation has increased.

Powell favors a faster “wrapping up” of the bond purchasing program and commented that he would talk about the need of “speeding up taper” at the 2021’s last meeting.

On Wednesday, the New Zealand economic docket will feature Building Permits s.a. for October on a month-over-month reading. On the US front, the economic docket will unveil the ADP Employment Change for November. Further, the ISM Manufacturing PMI for November and Fed speakers, with the Federal Reserve Chair Powell, testifying before the US Congress.

NZD/USD Price Forecast: Technical outlook

The NZD/USD 1-hour chart depicts the pair has no “strong” bias, but as long as the spot price remains below the 100 and the 200-hour simple moving averages (SMA’s), it favors USD bulls. At press time, the pair has found strong resistance at the confluence of the 50-hour SMA and the daily central pivot point at 0.6817.

Failure at 0.6817 could send the NZD/USD pair tumbling lower, potentially towards new YTD lows. The first support on the way down would be the S1 daily pivot at 0.6795, followed by the November 29 low at 0.6787 and then the S2 daily pivot at 0.6765.

On the flip side, if NZD bulls reclaim the 50-hour SMA, that would expose the 100-hour SMA as the first resistance at 0.6832. A breach of the latter would expose the R1 daily pivot at 0.6845, followed by the R2 daily pivot at 0.6867.