- NZD/USD recovers early losses and turns flat around 0.5745 as investors’ risk appetite improves.
- Middle East conflicts have intensified following the Iran-backed Houthis’ entry.
- The US Dollar ticks down ahead of Fed Powell’s speech.
The NZD/USD pair claws back its early losses and flattens around 0.5745 during the early European trading session on Monday. The Kiwi pair bounces back from its over two-month low of 0.5725, the lowest low seen in over two months. The pair attracts bids as the New Zealand Dollar (NZD) bounces back due to the revival of the risk-on impulse.
During the European trading session, S&P 500 futures have recovered their opening losses and turned slightly positive around 6,375.
Investors’ risk appetite has improved despite the war in the Middle East intensifying. Conflicts between the United States (US), Israel, and Iran have escalated due to a report from the Wall Street Journal (WSJ) claiming that the Pentagon is preparing to send 10,000 additional military troops for the ground invasion on Iran.
In addition to potential US ground military action, the entry of Iran-backed Houthis in the ongoing war has also widened geopolitical tensions.
Meanwhile, the US Dollar (USD) trades marginally lower ahead of the Federal Reserve’s (Fed) Chair Jerome Powell’s speech at 14:30 GMT. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks down to near 100.10.
NZD/USD technical analysis
In the daily chart, the NZD/USD pair maintains a bearish near-term bias as price holds below the 20-day Exponential Moving Average (EMA), which is bending lower and tracking the recent sequence of lower highs.
Momentum confirms selling pressure, with the RSI slipping toward the mid-30s and extending its decline from neutral territory, indicating sellers keep control while avoiding oversold conditions for now.
Initial resistance emerges at the 20-day EMA near 0.5840, and a daily close above this area would be needed to ease immediate downside pressure and open 0.5920 as the next upside level. On the downside, minor support sits at 0.5700, followed by a lower band around 0.5650, where a break would extend the current downtrend and expose the 0.5600 area as the next bearish target.
