- The NZD / USD builds on its modest weekly bullish open and regains a portion of Friday’s decline.
- Moderate USD demand and risk appetite sentiment offer some support to the NZ and higher perceived risk.
- The USD decline appears limited ahead of the FOMC meeting, justifying some caution for the pair’s bulls.
The NZD / USD pair has moved higher during the first half of the European session on Monday, staying close to the daily highs near the 0.7150 region.
The pair started the week with a modest gap to the upside on Monday and has recovered part of the previous day’s decline to the 0.7100 region, the lowest level since early May. The rally has been supported by weak demand for the US dollar and underlying bullish sentiment in financial markets, which tends to benefit the perceived riskier NZD.
The USD has struggled to capitalize on the strong advance on Friday, although it has remained supported by expectations that the Fed could begin the discussion on reducing its asset purchases in the face of rising inflationary pressures. It’s worth remembering that the latest US CPI report released last week showed the pace of inflation in the United States rose to a 13-year high in May.
Therefore, the key focus and attention will remain at the next FOMC monetary policy meeting on June 15-16. Apart from this, a modest rally in US Treasury yields could prevent investors from opening aggressive bearish positions around the USD. This makes it prudent to wait for some strong continuation buying before positioning for any further bullish movement for the NZD / USD pair.
There is no major US economic data release on Monday. That said, US bond yields could continue to play a key role in influencing price dynamics around the USD. Traders could continue to take cues from the broader market risk sentiment to seize some short-term opportunities around the NZD / USD pair.
NZD / USD technical levels
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