• NZD/USD falls back from 0.6070 as the broader market sentiment is risk-averse.
• The Fed is not expected to rush for aggressive rate cuts.
• The NZ Q4 labor market conditions are expected to remain downbeat.

The NZD/USD pair faces selling pressure while attempting to extend recovery above the immediate resistance of 0.6070 in the European session. The Kiwi asset has fallen on the backfoot as the broader market mood is downbeat, and investors are rushing back to safe-haven assets.

The US Dollar Index (DXY) delivers a light corrective move after a significant rally to near 104.60. The appeal for the US Dollar has improved as chances of aggressive rate cuts by the Federal Reserve (Fed) are waning swiftly.

Minneapolis Federal Reserve Bank President Neel Kashkari said on Monday that lower recession risks have given policymakers significant time to reconsider the outlook on interest rates.

Meanwhile, the New Zealand Dollar will be on tenterhooks ahead of the release of the Q4 Employment data, which will be published on Wednesday. Investors anticipate that the Unemployment Rate rose to 4.2% from 3.69% in the third quarter of 2023. The Labor Cost Index, representing momentum in wage growth, rose at a steady pace of 0.8%. The decision-making between higher inflation and deteriorating labor market conditions is expected to remain complicated for Reserve Bank of New Zealand (RBNZ) policymakers.

NZD/USD witnessed a steep fall after a channel breakdown on the daily timeframe. The broader outlook for the Kiwi asset is bearish as it is trading below the 200-day Exponential Moving Average (EMA), which hovers near 0.6112. The asset has dropped below the 50% Fibonacci retracement (plotted from October 26 low at 0.5772 to December 26 high near 0.6410) at 0.6090.

The 14-period Relative Strength Index (RSI) has slipped into the bearish range of 20.00-40.00, which indicates more downside ahead.

More downside would appear if the asset drops below the immediate low of 0.6050, which would expose the asset to a June 8 low at 0.6026, followed by the psychological support of 0.6000.

On the flip side, further recovery above January 24 high at 0.6150 would drive the asset towards January 31 high at 0.6075 and January 16 high at 0.6208