Ella 
In Asia on Monday, NZD/USD came under selling pressure for the fifth day in a row, falling to its lowest level since November 2022, near 0.5900.
Growing concerns over deteriorating economic conditions in China continued to weaken ANZ currencies including NZD/USD. In fact, New Zealand’s business services index fell into contraction territory in July at 47.8, the lowest reading since January 2022. In addition, the indicator was also revised down to 49.6 from 50.1 last month, indicating that the economy is slowing. This, along with maintaining an underlying bullish sentiment on the greenback, continues to put downward pressure on NZD/USD.
Indeed, the U.S. dollar index (DXY), which tracks the greenback against a basket of currencies, climbed to its highest level since July 7 and continued to be underpinned by expectations that the Federal Reserve will stick to its hawkish stance. That expectation was reaffirmed by a slightly higher-than-expected increase in U.S. producer prices in July, released on Friday. The Fed’s battle to bring inflation back to the Fed’s 2% target is far from won, amid a modest rise in consumer prices in July. That opens the door for the Fed to raise interest rates by 25 basis points in 2023 and continues to support further rises in U.S. bond yields, supporting the dollar.
In addition to the above-mentioned fundamental background, last Friday’s sustained break below the 0.6000 psychological mark is seen as another factor for subsequent technical selling in NZD/USD. This in turn suggests that NZD/USD has the least resistance to the downside. However, traders may refrain from making aggressive bets ahead of Chinese macro data on Tuesday and the Reserve Bank of New Zealand (RBNZ) monetary policy meeting on Wednesday.
