NZD Tumbles Ahead of Fed Decision as Yields Reach 2007 High
The New Zealand Dollar (NZD) is experiencing a decline ahead of the Federal Reserve's decision on interest rates. The NZD/USD pair has fallen to around 0.5757, and technical analysis suggests that it remains under pressure from below. A stronger US Dollar (USD) due to higher United States yields and rate-hike expectations is behind this move.
The markets are anticipating a 25 basis points hike to 3.75%-4.00%, which has led to a risk-off tone in the market, weighing on growth-sensitive currencies like the NZD. The US Treasury yield has also reached its highest level since 2007 at over 5%. Meanwhile, New Zealand's Q2 Gross Domestic Product is due later today and is expected to slow sharply to 0.1% from 0.8%
The technical analysis indicates that the NZD/USD pair remains below both its 20-period and 100-period Simple Moving Averages (SMAs), capping the upside around 0.5787 and 0.5877 respectively. The Relative Strength Index (RSI) is near 30, indicating stretched but persistent bearish momentum.