NZD/USD pares RBNZ-led gains above 0.6170 support confluence as Governor Orr utters recession

NZD/USD extends pullback from intraday high as RBNZ Governor Adrian Orr speaks.
RBNZ matched market forecasts of 0.50% rate hike but Governor Orr sounds cautiously optimistic.
Mixed sentiment ahead of FOMC Minutes also challenge NZD/USD bulls.

NZD/USD retreats to 0.6225 as it consolidates the Reserve Bank of New Zealand (RBNZ) inspired gains on Governor Adrian Orr’s unimpressive presser during early Wednesday. The market’s cautious mood ahead of the Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes also probes the Kiwi pair buyers of late.

After RBNZ announced its 10^th rate hike and showed readiness for more such measures, Governor Adrian Orr stated that they continue to forecast a 9-12 month recession. The policymaker also said that the demand must slow significantly. The same raises doubts about the future rate hikes of the New Zealand central bank, which in turn probe the NZD/USD bulls.

On the other hand, recently hawkish Fed bets join the chatters surrounding policy pivot at the US central bank to highlight the importance of today’s FOMC Minutes. As a result, the global markets appear more cautious ahead of the event and the same cap the Kiwi pair prices.

Elsewhere, comments from US Secretary of State Antony Blinken and Russian President Vladimir Putin were the top catalysts that weigh on the market sentiment as both suggest further tension between Moscow and Kyiv, which also includes the West and China of late. The same challenge the NZD/USD buyers due to New Zealand’s close ties with China and dependence on commodities.

It should be noted that the US Dollar Index (DXY) grinds near 104.15 after rising the most in a week the previous day after US data propelled hawkish Fed bets and the Treasury bond yields.

That said, the preliminary US S&P Global Manufacturing PMI rose to 47.8 in February from 46.9 prior and versus 47.3 market forecasts while the Services PMI jumped to the eight-month high to 50.5 compared to 47.2 expected and 46.8 previous readings. As a result, the S&P Global Composite PMI surpassed 47.5 analysts’ consensus and 46.8 previous reading to mark 50.2 figure. The strong data helped the FEDWATCH tool to suggest that the money market participants see the benchmark level peaking at 5.3% in July, and staying near those levels throughout the year, versus 5.10% expected by the US Federal Reserve (Fed).

Against this backdrop, the US 10-year and two-year treasury bond yields seesaw around the three-month highs marked the previous day while S&P 500 Futures print mild gains despite Wall Street’s negative closing.

Moving on, NZD/USD remains at the mercy of the risk catalysts ahead of the Fed Minutes as bulls appear less convinced.

Technical analysis

NZD/USD remains a bit far from the seller’s radar even as bearish MACD signals and a three-week-old descending trend line portray the Kiwi pair’s recent south-run.

Also challenging the NZD/USD bears is a convergence of the 100-DMA and 200-DMA, near 0.6170 by the press time.

However, the recovery moves need validation from the aforementioned resistance line from February 02, close to 0.6285 by the press time, to aim for the previous weekly high of 0.6390.

Meanwhile, a downside break of the stated DMA confluence, near 0.6170, could quickly drag the NZD/USD price towards the mid-November 2022 low near 0.6065.

To sum up, NZD/USD is likely to grind lower around the stated moving averages.