NZD/USD hangs near monthly low, holds above 200-day SMA ahead of US PCE Price Index

• NZD/USD meets with a fresh supply on Friday and drifts back closer to the monthly low.
• Bets for more rate hikes by the Fed, recession fears benefit the USD and exert pressure.
• Investors now look to the US Core PCE Price Index before placing fresh directional bets.

The NZD/USD pair comes under some renewed selling pressure following an early uptick to the 0.6245 area on Friday and drops to a fresh daily low during the first half of the European session. The pair is currently placed just a few pips above the 0.6200 mark, well within the striking distance of the monthly low touched last week and a technically significant 200-day SMA.

The US Dollar remains pinned near a multi-week top and continues to draw support from a combination of factors, which, in turn, is seen exerting downward pressure on the NZD/USD pair. Growing acceptance that the Federal Reserve will stick to its hawkish stance for longer remains supportive of elevated US Treasury bond yields and underpins the buck. Apart from this, the cautious market mood benefits the safe-haven Greenback and weighs on the risk-sensitive Kiwi.

The FOMC meeting minutes released on Wednesday showed that officials were determined to raise interest rates further to fully gain control over inflation. Moreover, the incoming upbeat US macro data pointed to an economy that remains resilient despite rising borrowing costs. In fact, the US Initial Jobless Claims unexpectedly fell last week and indicated a still-tight labor market. This, in turn, supports prospects for further policy tightening by the US central bank.

The USD bulls, however, might refrain from placing aggressive bets and move to the sidelines ahead of the release of the Fed's preferred inflation gauge - the Core PCE Price Index. The crucial data should influence market expectations about the Fed's future rate-hike path. This, in turn, will drive the USD demand and provide a fresh directional impetus to the NZD/USD pair. Nevertheless, spot prices seem poised to end in the red for the third successive week.

Technical levels to watch