NZD / USD at daily lows, bulls try to defend 0.7200 level

• The NZD / USD sees some selling on Tuesday and breaks two days of gains.
• Concerns about rising inflationary pressure prop up the USD and put some pressure on the pair.
• A weaker risk sentiment also contributes to the selling tone around the perceived higher risk NZD.

The pair NZD / USD moves lower during the European session on Tuesday, staying under pressure near daily lows and with the bears looking to break the 0.7200 level.

Having struggled to break above the 0.7240-45 resistance zone, the NZD / USD pair has seen some selling on Tuesday and has returned a significant part of the positive movement of the previous day. The pair, for now, seems to have broken two consecutive days of gains and has seen pressured by a good recovery in US dollar demand.

Friday’s softer NFP release has dampened market expectations that the Fed could start cutting its asset purchases sooner rather than later. Having said that, Concerns about rising inflationary pressure have prevented investors from opening aggressive bearish positions around the USD, which has triggered a hedging movement for intraday shorts.

USD bulls do not appear to be affected by the current drop in U.S. Treasury yields, and have turned their attention to a softer tone in the stock markets. This has been seen as another factor that has benefited the safe haven US dollar and it has also acted as a headwind for the higher perceived risk New Zealand dollar.

Market participants are now looking forward to the relatively empty US economic calendar, with JOLTS trade balance figures and job vacancies released later at the start of the US session. This, coupled with US bond yields and broader market risk sentiment, could sway the USD and give the NZD / USD some boost.

NZD / USD technical levels