- NZD/USD struggles to preserve its bullish momentum on Tuesday.
- The risk-averse market environment keeps NZD’s gains limited.
- US Dollar Index stays deep in the negative territory.
The NZD/USD pair gained more than 40 pips on Monday and rose to its highest level in a month at 0.7254 on Tuesday. However, the souring market mood made it difficult for the risk-sensitive kiwi to push higher and weighed on the pair. As of writing, NZD/USD was up modestly on the day at 0.7227.
USD selloff remains intact
Earlier in the day, the data published by the Reserve Bank of New Zealand (RBNZ) showed that Inflation Expectations in the first quarter rose to 1.89% on a quarterly basis from 1.59%. This reading helped NZD gather strength as rising consumer prices are likely to force the RBNZ to refrain from taking a dovish step.
On the other hand, the more-than-2% decline witnessed in the benchmark 10-year US Treasury bond yield is now allowing the greenback to take advantage of safe-haven flows. At the moment, the US Dollar Index is down 0.38% at 90.58, limiting NZD/USD’s downside.
The data published by the NFIB Research Foundation showed on Tuesday that the Business Optimism Index in the US declined to 95 in January from 95.9 in December. Later in the session, the JOLTS Job Openings data will be featured in the US economic docket. There won’t be any significant macroeconomic data releases from New Zealand on Wednesday.
Technical levels to watch for