- The NZD / USD captures some new buying on Wednesday after the sharp pullback the day before.
- RBNZ rate hike expectations continue to provide some support amid subdued demand around the USD.
- The market is focused on Wednesday on the release of the minutes of the FOMC’s June monetary policy meeting.
The pair NZD / USD holds firm during the first half of the European session on Wednesday and has risen to new daily highs around 0.7040 level in the last hour.
After having shown some resilience below the key psychological level of 0.7000, the NZD / USD pair managed to regain some positive traction on Wednesday and has been supported by a combination of factors. Investors have advanced their expectations of a rate hike by the RBNZ after a business survey in New Zealand showed a strong improvement in confidence. This, in turn, has been seen as a key factor that has acted as a tailwind for the NZD.
Apart of this, a weak action in the price of the US dollar It has provided additional momentum to the NZD / USD pair and has continued to support the intraday move to the upside. Investors now seem convinced that the Fed will wait a longer period before reducing its asset purchases or raising interest rates. This, coupled with an extension of the recent drop in US Treasury yields, has failed to help the US dollar capitalize on the strong gains of the previous day.
Having said that, Prevailing cautious sentiment, amid concerns over the spread of the highly contagious Delta variant of the coronavirus, has offered some support to the USD safe haven. Market participants may also refrain from opening aggressive positions, preferring to wait on the sidelines before the release of the minutes of the FOMC’s June meeting on Wednesday. This could limit any movement for the NZD / USD pair, at least for now.
As the Fed advanced its calendar for the first post-pandemic interest rate hike, new clues will now be sought on the central bank’s monetary policy outlook. This will play a key role in influencing short-term USD price dynamics and could generate further directional momentum to the NZD / USD pair.
NZD / USD technical levels
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