New Zealand Dollar pressured by hawkish Fed tone

NZD/USD trades under pressure near the 0.5700 level as the US Dollar (USD) remains supported by hawkish-leaning comments from Federal Reserve (Fed) Governor Christopher Waller and resilient United States (US) services data.

Waller said Fed policymakers remain committed to the 2% inflation target, calling it a credible pledge. He added that risks have “flipped around,” with the labor market appearing stabilized while inflation has been “taking off,” which changes how policymakers think about monetary policy.

The Fed official also stressed that the central bank will not keep rates low to help the US government finance its deficits. He said he would prefer the inflation target to be set as a range, but warned that changing the target at this point would not be credible.

US data also kept the Greenback supported. The ISM Services PMI receded to 54.0 in June, matching expectations, while the Employment Index improved sharply higher to 51.2 from 47.9. However, New Orders eased to 55.1, and Prices Paid fell to 67.7, suggesting that both demand and cost pressure cooled but remained elevated.

Short-term technical analysis:

On the four-hour chart, NZD/USD trades at 0.5705. The pair holds a neutral-to-slightly-bullish tone as it trades above the 20-period Simple Moving Average (SMA) at 0.5693 but remains capped by the 100-period SMA at 0.5717 overhead. This configuration suggests a consolidative bias within a shallow recovery phase, while the Relative Strength Index (RSI) around 58 hints at steady, but not overextended, bullish momentum.

After selling off overnight, the American session witnessed a recovery in the New Zealand Dollar, although the pair remains lower for Monday overall.

On the topside, initial resistance is aligned at the 100-period SMA near 0.5717, with broader bullish traction likely facing stronger hurdles at 0.5907, followed by 0.5930 and 0.5965. On the downside, immediate support is seen at 0.5702, backed by a nearby band at 0.5697 and the 20-period SMA and horizontal level clustered around 0.5693, ahead of a lower cushion at 0.5684.