- The NZD/USD is swinging between tepid gains and slight losses during the first half of the European session.
- Positive risk tone benefits risk sensitive NZD; the resurgence in demand for the USD caps the pair’s gains.
- Traders await the release of the US CPI report for further impetus ahead of next week’s FOMC meeting.
The pair NZD/USD It is struggling to gain ground and trading in a tight range during the first half of the European session on Tuesday. However, the pair manages to stay above the 0.6200 level while remaining below a nearly two-week high around the 0.6265 region, hit the day before.
A good one intraday recovery in US Treasury yields. it helps revive demand for the US dollar, which in turn is seen as a key factor acting as a headwind for the NZD/USD pair. Having said that, The generally positive tone in stock markets, bolstered by receding fears of a broader systemic crisis, lends some support to the NZD, sensitive to risk, and limits the falls of the pair. Traders also seem reluctant to open aggressive positions, preferring to wait on the sidelines before the release of US consumer inflation figures due later in the American session.
US CPI could influence expectations of the Fed’s future rate hike, which in turn will play a key role in USD demand and provide further directional momentum to NZD/USD. Markets have been speculating that the Fed could slow, if not stop, its rate-raising cycle, amid strains in the US banking system.. That being said, a stronger US CPI will boost expectations for more aggressive monetary policy tightening by the Fed and boost the USD ahead of the outcome of a two-day FOMC meeting starting next Tuesday.
However, the important US macro data should instill some volatility in the financial markets and allow traders to take advantage of some short-term opportunities around the NZD/USD pair. In the meantime, intraday price action warrants some caution before confirming that the pair has formed a short-term bottom and positioning for an extension of the recent rally move from levels below 0.6100, or the yearly low hit last week.
NZD/USD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
