• NZD/USD is under pressure and back below 0.6350 as global equities move lower as traders digest hawkish Fed rhetoric.
• Amid a lack of important economic events for the rest of the week, broader risk appetite will drive price action.

Downside in global equity markets as traders digest Fed Chair Jerome Powell’s hawkish comments on Tuesday is weighing on the risk-sensitive kiwi on Wednesday and NZD/USD has turned lower as a result. The pair was last trading just below the 0.6350 mark, down about 0.2% on the day, having failed for a second successive session to push above last Wednesday’s highs around the 0.6380 mark.

A quiet economic calendar for the rest of the week that sees the release of a few tier two US data points, New Zealand Q1 Producer Price Inflation plus the release of the New Zealand annual budget (both on Thursday) means that NZD/USD is likely to continue taking its queue from risk sentiment. Concerns about hawkish central banks at a time when global growth expectations are being revised lower suggests risk assets are unlikely to turn substantially higher before the week is out.

From a technical standpoint, NZD/USD looks very much to still locked within the negative trend that has been in play since early April. Since then, the pair has posted a series of lower lows followed by lower highs. Short-term speculators might thus be shorting the pair at current levels in the hope it will drop back to test last week’s lows just above 0.6200. A break below here opens the door to a run towards the psychologically important 0.6000 mark.