NZD/USD sticks to daily losses, around 0.6600 handle ahead of FOMC

• RBNZ easing speculations/dismal domestic data continues to exert some pressure.
• A subdued USD demand helped limit deeper losses ahead of the key FOMC decision.

The NZD/USD pair traded with a mild negative bias through the early North-American session, albeit has managed to hold above multi-week lows set earlier this Wednesday.

The pair extended its recent pullback from three-month tops and weakened farther below the 0.6600 handle, dropping back closer to monthly lows touched on July 7 amid speculations that the RBNZ is looking at unconventional monetary policy easing measures.

The sentiment deteriorated further following the disappointing release of the NZ Business confidence index, which deteriorated further in July and dragged the pair to an intraday low level of 0.6587, though a subdued US Dollar demand helped limit deeper losses.

The pair did attempt an intraday recovery but failed to capitalize as investors refrained from placing any aggressive bets ahead of the highly anticipated FOMC monetary policy decision, due to be announced later during the US trading session.

The US central bank is widely expected to cut its benchmark interest rates by 25 bps points and the move is largely priced in the market. Hence, the key focus will be on the accompanying rate statement and the Fed Chair Jerome Powell’s comments at the post-meeting press conferences.

The policy wording and Powell’s remarks will be closely scrutinized for clues over the central bank’s monetary policy outlook for the rest of the year, which will play a key role in influencing the near-term USD price dynamics and eventually provide a fresh directional impetus.

Technical levels to watch