- NZD/USD witnessed an intraday turnaround from one-week tops amid sustained USD buying.
- The upbeat US economic outlook, surging US bond yields, softer risk tone benefitted the USD.
The NZD/USD pair remained depressed through the early North American session and was last seen hovering near the lower end of its daily trading range, around the 0.6980-75 region.
The pair struggled to capitalize on the early uptick to the 0.7030-35 area, or one-week tops, instead met with some fresh supply and for now, seems to have stalled its recent bounce from multi-month lows. The US dollar shot to fresh four-month tops on Tuesday, which, in turn, was seen as a key factor exerting pressure on the NZD/USD pair.
The USD remained well supported by the prospects for a relatively stronger US economic recovery from the pandemic and got an additional boost from a sharp spike in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond surged back above the 1.75% threshold or the highest level since January 2020.
Meanwhile, another selloff in the US fixed income market raised fears of distressed selling on other asset classes. This was evident from a weaker opening in the US equity markets. This was seen as another factor that underpinned the safe-haven greenback and further collaborated to drive flows away from the perceived riskier kiwi.
On the economic data front, the Conference Board’s Consumer Confidence Index jumped to 109.7 for March from the previous month’s downwardly revised reading of 90.4. The reading surpassed even the most optimistic estimates and remained supportive of the strong bid tone surrounding the USD, though did little to provide any fresh impetus.
With Tuesday’s US economic data out of the way, the US bond yields will continue to play a key role in influencing the USD price dynamics. This, along with the broader market risk sentiment, will provide some impetus to the NZD/USD pair and allow traders to grab some short-term opportunities.
Technical levels to watch
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