- NZD/USD is pushing lower during the European trading hours.
- US Dollar Index edges higher toward 92.00 ahead of FOMC.
- 10-year US Treasury bond yield is up more than 3% on Wednesday.
The NZD/USD pair came under renewed bearish pressure during the European trading hours as the USD started to find demand on the back of rising US Treasury bond yields. As of writing, the pair was trading at a fresh daily low of 0.7168, losing 0.3%.
DXY closes in on 92.00 as investors eye FOMC’s dot plot
Ahead of the FOMC’s policy announcements, the 10-year US Treasury bond yield climbed to its highest level in more than a year at 1.669% and was last seen rising 3.05% on a daily basis at 1.667%. Consequently, the US Dollar Index gained traction and is currently posting modest daily gains at 91.96.
Earlier in the day, the data from New Zealand revealed that the Current Account deficit in the fourth quarter narrowed to NZ$2.695 billion from NZ$3.521 billion in the third quarter but this reading was largely ignored by market participants.
The FOMC is widely expected to keep its policy rate unchanged. However, the updated Economic Projections will be scrutinized by investors for potential signs toward a hawkish shift in the long-term rate outlook.
If markets conclude that the Fed could start tightening its policy earlier than expected amid concerns over surging T-bond yields and inflation expectations, NZD/USD could extend its slide ahead of the weekend. On the other hand, the pair could turn north if policymakers continue to downplay inflation expectations and trigger a USD selloff.
Technical levels to watch for
Share
