NZD/USD holds strong intraday gains at 1-month highs above 0.6450

• NZD/USD regains strong positive traction and jumps to more than a month highs on Wednesday.
• Optimism about the recovery of the Chinese economy strongly boosts the risk-sensitive NZD.
• The bulls seem to be unaffected by the strengthening dollar and could now try to recapture the 0.6500 level.

The pair NZD/USD attracts new purchases after an initial drop to the 0.6375 area and jumps to new highs of more than a month during the European session on Wednesday. The pair is currently hovering around the 0.6460 zone, up more than 0.45% on the day, and has now approached the multi-month high hit in December.

The Chinese macroeconomic datamostly optimistic, published on Monday, together with the new stimulus measures announced by the Chinese government, fueled optimism about a strong recovery of the world’s second largest economy. This, in turn, boosts investor confidence, which benefits the risk-sensitive NZD and provides a nice boost to the NZD/USD pair. Momentum does not appear to be affected by a resurgence in demand for the US dollar, fueled by the Japanese yen sell-off following the Bank of Japan’s monetary policy decision.

Meanwhile, the strength of the dollar remains limited in a context of increasingly firm expectations of less aggressive monetary policy tightening by the Fed. Indeed, markets now seem convinced that the US central bank will soften its hawkish stance on signs of easing inflationary pressure and have been pricing in a smaller rate hike of 25 basis points in February. . This leads to a further drop in US Treasury yields, which should act as a headwind for the USD and favor NZD/USD bulls.

Even from a technical perspective, sustained strength above the upper end of a one and a half week range supports the prospects of a further short-term bullish move for the NZD/USD pair. Therefore, a continuation move higher, towards the recovery of the psychological level of 0.6500, now seems a clear possibility. The US economic agenda, with the monthly Producer Price Index and Retail Sales as main indicators, will focus the attention of investors at the beginning of the American session.

NZD/USD technical levels