• US dollar holds onto significant daily gains across the board on risk aversion.
  • NZD/USD heads for lowest daily close since late January.
  • AUD/NZD falls to three weeks lows.

The NZD/USD bottomed hours ago at 0.6580, the lowest level in almost three months. It then rebounded, trimming losses and peaked at 0.6633 before turning back to the 0.6600 area. The pair remains under pressure on the back of a stronger US dollar across the board.

The kiwi is falling for the third consecutive day versus the dollar, accumulating a decline of more than 200 pips. The key driver is risk aversion. The worsening in the situation with COVID in China and concerns about the impact of a more aggressive tightening from the Federal Reserve.

Equity prices in Wall Street are falling 1% on average while at the same time US yields are falling sharply amid a rally in Treasuries with investors looking for safety. The US 10-year yield stands at 2.77%, the lowest since April 14.

Despite the decline versus the dollar and the deterioration in market sentiment, the kiwi is not among the worst performers in the G10 space. AUD/NZD dropped to the lowest level in three weeks at 1.0823, moving further away from the one-year highs it reached last week at 1.0998.

Below 0.6590, next stop at 2022 lows

The bias in NZD/USD remains negative. The area of 0.6585/90 is a key support and a break lower should clear the way to more losses, targeting the 2022 low at 0.6528 (interim support at 0.6555. On the upside, resistance levels are seen at 0.6640 followed by 0.6675 and 0.6715.

Technical levels

This article was originally published by Fxstreet.com.Read the original article here.

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