• NZD/SUD faces rejection near the 200-day SMA and meets with a fresh supply on Wednesday.
• A goodish intraday pickup in the USD demand turns out to be a key factor exerting pressure.
• The Fed’s less hawkish stance, a positive risk tone caps the USD and lends support to the pair.

The NZD/USD pair once again fails near a technically significant 200-day Simple Moving Average (SMA) and comes under fresh selling pressure on Wednesday. Spot prices, however, remain depressed through the first half of the European session and currently trade just below mid-0.6200s, down less than 0.15% for the day.

The US Dollar (USD) gains some positive traction and snaps a two-day losing streak, which, in turn, is seen as a key factor acting as a headwind for the NZD/USD pair. The USD uptick, however, lacks any obvious fundamental catalyst and remains capped amid the Federal Reserve’s less hawkish stance. In fact, the US central bank last week toned down its approach to reining in inflation and signalled that a pause to interest rate hikes was on the horizon in the wake of the recent turmoil in the banking sector.

Apart from this, the prevalent risk-on mood – as depicted by a generally positive tone around the equity markets – caps gains for the safe-haven Greenback and lends some support to the risk-sensitive Kiwi. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company calmed nerves about the contagion risk. This, coupled with the lack of any bad news from the banking sector over the past two weeks, boosts investors’ confidence and helped reverse the recent negative sentiment in the markets.

The aforementioned fundamental backdrop supports prospects for some meaningful appreciating move for the NZD/USD pair. That said, repeated failures to make it through the very important 200-day SMA make it prudent to wait for strong follow-through buying before placing fresh bullish bets. Traders now look to the US economic docket, featuring Pending Home Sales data. This, along with the US bond yields and the broader risk sentiment, might influence the USD and provide some impetus to the major.