NZD/USD at daily highs, just below 0.6250 amid positive risk tone

• NZD/USD bounces from the 0.6200 level and reverses some of the previous day’s losses.
• The positive risk tone weighs on the safe-haven USD and benefits the risk-sensitive NZD.
• The upside looks limited as traders await the release of the US Core PCE Price Index on Friday.

He NZD/USD attracts fresh buying near the 0.6200 level and continues its intraday rise during the early stages of the European session on Thursday. The pair currently sits just below the 0.6250 zone, up close to 0.20% on the day and seems to have halted the previous day’s rejection slide from the 200 day SMA technically for now. significant.

As investors overlook weaker New Zealand data, Generally positive tone around stock markets weighs on safe-haven US dollar (USD) and it turns out to be a key factor that benefits the risk-sensitive NZD. Against the background of diminishing fears of a generalized banking crisis, the hopes for a strong economic recovery in China They boost investor confidence and continue to support the prevailing risk appetite environment. Optimism is fueled by comments from the Chinese premier, Li Qiang, who promises more stimulus to boost domestic spending and undertake reforms that help stimulate growth.

However, bullish outlook for NZD/USD looks limitedat least for the moment, in a context of revival of expectations for further tightening of monetary policy by the Federal Reserve (Fed). The acquisition of Silicon Valley Bank by First Citizens Bank & Trust Company calmed market nerves about the risk of contagion. Furthermore, the fact that no new cracks have appeared in the banking sector in the past two weeks raises hopes that a full-blown banking crisis has been averted. This could allow the US central bank to return to its interest rate hikes to fight inflation, which could support the dollar.

Therefore, it would be prudent to wait for a strong continuation and sustained strength above the 200-day SMA before positioning for any further upside for the NZD/USD pair. Investors also appear reticent and would prefer to wait for the release of the US core PCE price index, the Fed’s preferred inflation gauge, on Friday before taking aggressive directional positions. Meanwhile, the US economic calendar on Thursday, with the final release of Q4 GDP and initial weekly jobless claims, could weigh on the dollar and give the pair some momentum later in the American session. .

Technical levels to watch