- New Zealand’s upbeat CPI report helps NZD / USD gain some positive traction on Wednesday.
- Renewed nerves surrounding COVID-19 benefit the safe-haven USD and limit the pair’s gains.
The pair NZD / USD maintains its modest gains during the European session on Wednesday, although it lacks a strong continuation buy and remains trapped within a range around the region of 0.7180.
Following the previous day’s retracement of around 55 pips from month-long highs, the pair managed to regain some positive traction on Wednesday following the release of New Zealand’s inflation figures. According to data published by Statistics New Zealand, the general CPI rose 0.8% in the quarter ending in March and the annual rate rose 1.5%. The readings were slightly better than expected, which, in turn, has offered some support for the NZD / USD pair.
The positive factor, to a greater extent, has been seen offset by renewed fears about another dangerous wave of coronavirus infections in some countries. Market concerns have been evident from the prevailing cautious sentiment in equity markets, which offers some support to the safe-haven US dollar and limits NZD gains higher perceived risk. However, the USD rally has not continued amid lower expectations of an earlier-than-anticipated Fed tightening of monetary policy.
Investors now seem convinced that any spike in inflation is likely to be temporary and that the Fed will keep interest rates near zero for a longer period. This could prevent the USD bulls from opening aggressive positions and help limit the NZD / USD pair’s slide. Even from a technical perspective, the acceptance above the 100-day simple moving average supports prospects for a move back to the 0.7230 region, the previous day’s high.
There is no major economic data release from the US, leaving the NZD / USD pair at the mercy of USD price dynamics. Apart from this, investors could follow the signs of the broader market risk sentiment to seize some short-term opportunities around the pair.
NZD / USD technical levels
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