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  • NZD/USD is edging lower during the European session on Wednesday.
  • US Dollar Index stays relatively quiet above 92.20.
  • 10-year US Treasury bond yield is posting small gains ahead of FOMC Minutes.

The NZD/USD pair pushed lower on Tuesday but managed to stage a rebound during the American trading hours before closing virtually unchanged at 0.7057. With investors turning cautious on Wednesday, the pair lost its traction and was last seen losing 0.27% on a daily basis at 0.7040.

During the Asian session, the data from New Zealand showed that the ANZ Commodity Price Index rose by 6.1% in March. This reading beat the market expectation of 2.7% by a wide margin but was largely ignored by market participants.

Currently,  the Euro Stoxx 50 Index is down 0.3% on the day and the S&P 500 Futures are flat at 4,063 confirming the view that risk flows are struggling to dominate the financial markets. In the meantime, the benchmark 10-year US Treasury bond yield is up 0.65% on the day after losing more than 3% on Tuesday, helping the greenback show resilience. At the moment, the US Dollar Index down 0.04% at 92.26.

Later in the session, the FOMC will release the minutes of its March 16-17 meeting and US President Joe Biden will deliver an update on his spending plans.

NZD/USD near-term outlook

Credit Suisse analysts think that NZD/USD will continue to fluctuate in a neutral range between 0.6870 and 0.7200 in the near term.

“New Zealand’s vaccine rollout is lagging the rest of the developed world; investors might now reassess the validity of NZ’s so-far successful strategy of micro-lockdowns,” analysts noted.  “Given how responsive the currency has been to changes in expectations around non-traditional monetary policy, we think the RBNZ may prefer to tiptoe around the possibility of tightening in order to avoid an unwelcome rally in the NZD.”  

Technical levels to watch for