• NZD/USD heads for the lowest daily close since late February.
• Technicals point to further losses over the short term.
• US dollar remains strong amid higher US yields and cautions markets.

The NZD/USD is falling for the fifth consecutive day on Monday and technical indicators point to oversold readings in the short term. Still, no signs of correction are seen. The break under 0.6750 left the pair vulnerable to more losses.

Vulnerable while under 0.6750

The NZ/USD is trading at 0.6719, the lowest level in seven weeks. The kiwi failed to recover the 0.6750 area and weakened again during the American session as US yields turn again to the upside.

The US 10-year yield stands at 2.85% and the 30-year at 2.96%, the highest level since April 2019. The DXY is up 0.25%, at 100.75, testing the 2022 top. The stronger US dollar weighs on NZD/USD, unable to benefit from higher commodity prices.

The current week is light in terms of economic data, attention will likely continue on Ukraine and Federal Reserve and RBNZ expectations.

The key day in New Zealand will be on Thursday with Q1 CPI. “Headline inflation is expected at 7.1% y/y vs. 5.9% in Q4.  If so, it would be the highest since Q2 90 and further above the 1-3% target range.  Last week, the RBNZ delivered the expected 50 bp hike and said it was comfortable with its expected rate path from the February meeting, which sees the policy rate at 2.5% by early 2023 before peaking near 3.5% in 2024”, mentioned analysts at BBH.

In the US, the most relevant day will likely be Friday with service sector surveys. On Wednesday, the Fed will release the Beige Book.

Technical levels