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  • NZD/USD turned south after climbing to multi-year highs on Wednesday.
  • Decisive rebound witnessed on US Dollar Index weighs on NZD/USD.
  • Focus shifts to key macroeconomic data releases from US.

After touching its highest level since April 2018 at 0.7316 on Wednesday, the NZD/USD pair reversed its course on Thursday pressured by the broad-based USD strength. As of writing, the pair was down 0.58% on a daily basis at 0.7247.

DXY closes in on 90.00

The sharp upsurge witnessed in the US Treasury bond yields helped the greenback find demand despite the risk-positive market environment on Wednesday. The 10-year US T-bond yield gained more than 8% as investors continued to price ramped-up government spending with Democrats taking the majority both in the House and the Senate.

The US Dollar Index (DXY), which plunged to its worst level in more than two years at 89.20 on Wednesday, staged a decisive recovery and closed in the positive territory. With the US T-bond yields staying in the positive territory, the DXY preserves its bullish momentum and was last seen gaining 0.35% at 89.84.

Later in the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Additionally, the ISM will release the Services PMI report for December. 

In the meantime, Wall Street’s main indexes remain on track to open in the positive territory with the S&P 500 Futures rising nearly 0.4%. If the market mood remains upbeat in the second half of the day, the USD could find it difficult to extend its rebound and NZD/USD downside could remain limited. 

There won’t be any significant macroeconomic data releases from New Zealand on Friday.

Technical levels to watch for