- NZD/USD stays under modest bearish pressure following Wednesday’s climb.
- US Dollar Index rebounds above 91.60 ahead of Initial Jobless Claims data.
- Rising US T-bond yields continue to support the greenback.
The heavy selling pressure surrounding the greenback in the late American session allowed NZD/USD to close the day with strong gains on Wednesday. However, the pair struggled to preserve its bullish momentum and started to retrace its climb. As of writing, NZD/USD was down 0.3% on the day at 0.7218.
DXY rebounds after FOMC-inspired slump
The US Federal Reserve’s Summary of Projections revealed on Wednesday that the majority of policymakers were not expecting a rate hike until the end of 2023. Additionally, FOMC Chairman Jerome Powell reaffirmed that they will not even think about tapering asset purchases until they see substantial progress toward their employment and inflation goals.
The FOMC’s dovish tone triggered a USD selloff and the US Dollar Index (DXY) snapped a three-day winning streak and lost nearly 0.5% on Wednesday.
However, the 10-year US Treasury bond yield extended its rally and touched its highest level in nearly 14 months at 1.744% on Thursday and helped the greenback regather its strength. At the moment, the DXY is up 0.2% on the day at 91.62.
Later in the session, the US Department of Labor’s weekly Initial Jobless Claims will be the only data featured in the US economic docket. Meanwhile, the S&P 500 Futures are down 0.4% on the day, suggesting that the USD is likely to continue to outperform its rivals in the second half of the day with investors turning cautious amid surging T-bond yields.
Technical levels to watch for
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