- A combination of factors does not help the NZD / USD to capitalize on its positive intraday movement.
- Nervousness around COVID-19 and a modest pickup in demand for USD triggers new sales at higher levels.
- Investors now await US economic data for further momentum ahead of Friday’s NFP.
The pair of NZD / USD has returned its initial earnings and has fallen to new daily lows, around the region of 0.6980, during the European session on Wednesday.
The pair has gained some positive traction during the early part of Wednesday’s trading action, although have struggled to capitalize on the move or find acceptance above the key psychological level of 0.7000. Investors remain concerned about the economic impact of the spread of the Delta variant of the coronavirus highly infectious throughout many Asian countries. This, coupled with a modest strength in the US dollar, has limited the rise of the NZD / USD pair and led to some selling at higher levels.
The USD has remained supported by the speculation that the Fed will tighten its monetary policy if price pressures continue to intensify. Market expectations were further fueled by comments from Richmond Fed Chairman Thomas Barkin on Monday saying the central bank has made substantial progress toward its inflation target to start reducing asset purchases. The already stronger USD was also supported by Tuesday’s upbeat US Consumer Confidence Index, which shot to a new pandemic high in June and signaled growing optimism.
With the latest move to the downside, the NZD / USD pair has moved towards the negative territory for the fourth day in a row and it looks set to prolong its recent pullback from near the 0.7100 level. Market participants are now awaiting the US economic calendar, which includes the release of ADP’s report on private sector employment, Chicago PMI and pending home sales, for further momentum at the start of today’s US session. . The key focus of attention, however, will remain on Friday’s monthly US NFP jobs report, which could determine the Fed’s monetary policy outlook and influence the short-term dynamics of USD prices. This, in turn, will play a key role in determining the next directional move for the NZD / USD pair.
NZD / USD technical levels
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