- The NZD / USD witnesses a strong sell on Friday and breaks a four-day winning streak.
- Rising US bond yields help reignite demand for the USD and cause the pair to drop.
- Risk appetite could help limit losses ahead of key US inflation data on Friday.
The pair NZD / USD it has continued to lose ground at the start of the European session on Friday, hitting daily lows around the 0.7240 region. At the time of writing, the pair recovers to the e 0.7260 region, losing more than 30 pips on the day.
Having struggled to find acceptance above the 0.7300 level, the pair has witnessed a strong sell on the last day of the week and has broken four consecutive days of winning streak. The sharp drop is due exclusively to a modest pickup in demand for the US dollar, which has found some support in the rally in US Treasury yields.
Long-term US Treasuries were sold on Thursday in reaction to mostly upbeat US economic data and News that US President Joe Biden will announce a $ 6 trillion budget for fiscal year 2022. This further fueled the concerns about rising inflationary pressure, which could force the Fed to act faster and tighten its monetary policy sooner rather than later.
Global markets celebrated the Biden administration’s multi-million dollar spending plan, which was evident from an extension of a strong rally in global stock markets. This could extend some support to the perceived riskier NZD and help limit any further losses to the NZD / USD pair ahead of key US inflation data on Friday.
The US Bureau of Economic Analysis will release the Fed’s preferred inflation indicator, the core PCE price index, during today’s American session. This, coupled with the news of US stimulus, will boost US bond yields and influence the USD. Investors could follow the signs of the broader market risk sentiment to seize some short-term opportunities around the NZD / USD pair.
NZD / USD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
