NZD/USD renews four-day lows below 0.6070
- NZD/USD pair falls more than 1% on Monday.
- US Dollar Index continues to edge higher above 100.
- RBNZ will announce its policy rate decision on Wednesday.
After moving sideways near mid-0.61s during the Asian session, the NZD/USD pair lost its traction and dropped below 0.6100. Although the pair staged a technical rebound in the early trading hours of the American session, it failed to gather momentum. As of writing, the pair was trading at its lowest level in four days at 0.6068, losing 1.05% on a daily basis.
The broad-based USD strength on Monday seems to be weighing on NZD/USD. In the absence of significant macroeconomic data releases, the upbeat performance of US Treasury bond yields helps the greenback find demand. At the moment, the 10-year T-bond yield is up 2% on the day while the US Dollar Index (DXY) is gaining 1.1% at 100.20.
Eyes on RBNZ meeting
On Tuesday, the Consumer Price Index (CPI) will highlight the US economic docket. However, the primary catalyst for the pair this week will likely be the Reserve Bank of New Zealand's (RBNZ) interest rate decision and monetary policy statement.
Previewing the RBNZ event, “after slashing the Cash Rate by 75bps in March while maintaining its stance that the OCR is likely to remain at 0.25% for at least the next 12 months the risk this week is bond purchases increasing from the current $30bn to $60bn," noted FXStreet analyst Ross Burland. “Should there be a surprise in the event with the RBNZ mentioning the possibility of a negative OCR, this is where things could get more interesting and weigh more heavily on the kiwi.”
Technical levels to watch for