NZD/USD bulls nowhere to be seen as price breaks key support

• NZD/USD bears stay in control as the US dollar recovers from correction. 
• China is weighing on the risk sentiment surrounding the antipodeans. 

NZD/USD is under pressure again at the start of the week with no let-up in the bear cycle. At 0.6433, the bird is down by some 0.33% after falling from a high of 0.6473 to a low of 0.6412. 

The US dollar, meanwhile, has rebounded from the corrective lows made at the end of last month during month-end rebalancing. It sits at a 20-year high against a basket of currencies on Monday before an expected Federal Reserve rate hike this week. DXY reached a high of 103.747 today, pressuring the beaten-down antipodeans.

The focus is on the Federal Reserve this week and traders are on the lookout for the potential for the US central bank to adopt an even more hawkish tone than many expect. The Fed is expected to hike rates 50 bp to 1.0% Wednesday. While there will be no new forecasts until the June 14-15 FOMC meeting, another 50 bp hike is widely expected then also. In fact, as analysts at Brown Brothers Harriman note, WIRP suggests nearly 50% odds of a 75 bp hike then. 

''Looking further out,'' the analysts said, ''the swaps market is now pricing in 300 bp of tightening over the next 12 months that would see the Fed Funds rate peak near 3.5%. Because of the media blackout, there are no Fed speakers until Chair Jerome Powell’s post-decision press conference Wednesday afternoon.''

The comments by Fed Chairman Jerome Powell at the conclusion of the meeting will be scrutinized for any new indications on whether the Fed will continue to hike rates to battle rising price pressures even if the economy weakens. 

Meanwhile, global growth concerns have also boosted demand for the greenback and considering the close proximity of China and the trading relations between the antipodeans, the Chines lockdowns have weighed. Reuters reports that ''authorities in Shanghai on Monday reported 58 new cases outside areas under strict lockdown, while Beijing pressed on with testing millions of people.''

In weekend data, it has shown that China's factory activity has contracted at a steeper pace in April as the lockdowns halted industrial production and disrupted the supply chain. The data rasies fears of a sharp economic slowdown in the second quarter that will weigh on global growth.

NZD/USD technical analysis

The price has penertrated a weekly support level and is now moving deeper in the weekly demand zone as buls move aside.