- NZD/USD is holding on to the 0.6600 figure as volatility eases after the US NFP report.
- The rise in US Treasury yields halts NZD/USD’s bullish moves as the 10-year yield stands above 1.90%.
- NZD/USD has a downside bias and could test yearly lows if it fails to recapture 0.6700.
The New Zealand dollar rises as the American session begins and holds above 0.6600, though facing resistance at a 12-month downtrend line of a descending channel. At the time of writing this article, it is trading at 0.6630. Market sentiment is leaning towards optimism, although it is mixed in the FX complex.
Rising US Treasury yields along the curve weighs a bit on risk-sensitive currencies, led by the 10-year US Treasury yield at 1,931 %, after an impressive US NFP report. However, the dollar failed to capitalize on that as global central banks look to tighten monetary conditions.
The Reserve Bank of New Zealand (RBNZ) is due to meet on February 26, where market analysts expect a 25 bps hike in the overnight cash rate (OCR) to hit 1%. That would make it the first G8 central bank to reach that threshold, followed by the Bank of England (BoE), at 0.50%.
In the absence of macro news out of New Zealand, NZD/USD traders would lean on the dollar dynamics. For its part, the US economic agenda would not report first or second level information until February 10, when the US Consumer Price Index (CPI) for January will be released, which is expected to rise three tenths to 7.3%. , followed by the core CPI which is estimated at 5.9%.
NZD/USD Price Forecast: Technical Outlook
NZD/USD remains biased lower. On Friday, a downward sloping lower trend line of a descending channel, rejected to the upside, moves around 0.6680, causing the pair to drop towards the figure. However, the USD bulls were unable to push the pair to the 0.6500 level, which indicates that the pair could be heading towards consolidation ahead of the RBNZ rally at the end of the month.
To the downside, the first support for the NZD/USD would be 0.6600. A breach of the latter would expose the Feb 4 daily low at 0.6588, followed by the Jan 28 cycle low at 0.6528 and then 0.6500.
Conversely, the 0.6580-85 region, where the 12-month downtrend line passes, would be the first resistance, followed by the previous daily low on Jan 6 turning into resistance at 0.6732.
Additional technical levels
Source: Fx Street
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