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New Zealand Dollar May Keep Falling vs USD as Fed Rate Hike Bets Firm

New Zealand Dollar May Keep Falling vs USD as Fed Rate Hike Bets Firm

Ilya Spivak, Head Strategist, APAC

NZD/USD OUTLOOK – TALKING POINTS:

  • New Zealand Dollar drops as Fed rate hike bets swell to start 2022
  • Break below 0.68 might pave the way to challenge last year’s low
  • US ISM surveys, employment data, FOMC minutes in the spotlight

The New Zealand Dollar suffered the largest one-day loss in two weeks against its US counterpart as markets returned from New Year holiday closures. The return of liquidity marked a potent push higher for the Greenback as Fed rate hike expectations swelled.

For its part, NZD/USD pointedly pushed below congestion area support anchored at 0.6798, seemingly confirming a downside break on a daily closing basis. A subsequent retest of this barrier as resistance seems to be struggling for momentum, bolstering the argument for bearish follow-through.

A relatively minor layer of initial support lines at up 0.6737, followed by the 2021 swing bottom at the 0.67 figure. Alternatively, re-establishing a foothold above the 0.68 mark sees the next layer of resistance capped at 0.6868, with scope for a push above the 0.69 handle thereafter if buyers manage a breach.

The economic data docket offers little from New Zealand this week, keeping the Fed-driven narrative in the spotlight. That will be informed by December editions of manufacturing and service-sector ISM surveys, the closely-watched employment report, and minutes from last month’s fateful FOMC meeting.

New Zealand Dollar May Keep Falling vs USD as Fed Rate Hike Bets Firm

NZD/USD daily chart created withTradingView

NZD/USD TRADING RESOURCES

--- Written by Ilya Spivak, Head of Greater Asia at DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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