NZD/USD clings to daily gains, trades around 0.7200 ahead of key events

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  • NZD/USD is staging a modest recovery on Thursday.
  • US Dollar Index consolidates Wednesday’s gains around 90.30.
  • Investors await FOMC Chairman Powell’s speech, President-elect Biden’s stimulus package.

The NZD/USD pair lost more than 30 pips on Wednesday as the greenback preserved its strength against its rivals during the American trading hours. On Thursday, however, the pair stages a technical correction and was last seen gaining 0.35% on the day at 0.7202.

DXY stays quiet in the European session

Investors don’t seem to be willing to make additional bullish USD bets while waiting for FOMC Chairman Jerome Powell to deliver a speech at 1730 GMT later in the day.

If Powell talks about possible timing for tapering, the USD could start outperforming its rivals. On the other hand, any fresh clues regarding adjustments to the duration of the amount of asset purchases could be seen as a dovish shift and hurt the greenback.

Additionally, President-elect Joe Biden is set to unveil an aid package, which will be reportedly worth around $2 trillion. If US Treasury bond yields extend the rally on ramped-up government spending, the US Dollar Index (DXY) could gain traction and cause NZD/USD to turn south. At the moment, the DXY is virtually unchanged on a daily basis at 90.34.

In the meantime, the US Department of Labor will release its weekly Initial Jobless Claims data in the early American session. 

Technical levels to consider

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