- A turnaround in the risk sentiment lends some support to riskier currencies – like the Kiwi.
- A modest pickup in the USD demand might now keep a lid on any meaningful recovery move.
- Traders now eye US economic docket for short-term impetus ahead of FOMC on Wednesday.
The NZD/USD pair jumped around 25-pips in the last hour or so and spiked back closer to the previous session’s swing high, around the 0.6515 region.
The pair continued showing some resilience below the key 0.6500 psychological mark, with a sudden turnaround in the global risk sentiment prompting some short-covering around perceived riskier currencies – like the Kiwi.
The ECB President Mario Draghi’s dovish remarks in Sintra opened the door for an interest rate cut and boosted investors’ appetite for riskier assets, which was evident from a solid intraday bounce in the European equity markets.
Meanwhile, some renewed US Dollar buying interest, primarily led by some aggressive selling around the shared currency, turned out to be the only factor keeping a lid on any strong follow-through recovery move, at least for now.
Hence, it remains to be seen if the attempted bounce is backed by any genuine buying or is solely led by intraday short-covering as market participants now look forward to the US economic docket for some fresh impetus.
Tuesday’s US economic docket – featuring the release of housing starts and building permits, might now be looked upon for short-term trading opportunities, though the key focus will remain on Wednesday’s FOMC policy update.
Technical levels to watch
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