- USD profit-taking and localized strength in antipodean currencies helped NZD/USD recover above 0.6750 on Wednesday.
- Traders are keeping an eye on key upcoming risk events on Thursday, including Q1 NZ CPI and Fed Chairman Powell’s speech.
Profit-taking on the increasingly widespread long USD position, in addition to localized strength in the two antipodean currencies, has made the NZD/USD post an impressive recovery on Wednesday. The pair was last seen up 0.8% at 0.6785, above previous weekly lows at 0.6725 and eyeing a test of its 50-day moving average, which is currently just above 0.6810.
Key first-quarter 2022 New Zealand consumer price inflation figures are scheduled to be released at the start of the Asian session on Thursday and, if they are as strong as the just-released Canadian figures, could start a further recovery in the pair. Short-term NZD/USD bulls will watch for a possible pullback towards 0.6850 and a rally towards the key resistance at 0.6900, where the 200 DMA resides.
However, while USD bears are in control on Wednesday, this goes against the recent trend towards a stronger dollar as traders price in a more aggressive Fed tightening cycle and therefore could be short-lived. Fed Chairman Jerome Powell, if aggressive enough in his speech on Thursday, could revive the US dollar. NZD/USD traders should be ready for the pair to pull back to test the March/April lows at 0.6700 again.
Technical levels
Source: Fx Street
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