NZD/USD goes into consolidation above 0.7150 following three-day rally

• NZD/USD remains on track to post strong weekly gains.
• US Dollar Index stays in the negative territory on Friday.
• Wall Street’s main indexes look to open modestly higher.

The NZD/USD pair advanced to its highest level in more than three weeks at 0.7182 on Thursday and seems to have gone into a consolidation phase ahead of the weekend. As of writing, the pair was unchanged on a daily basis at 0.7168.  For the week, NZD/USD is up around 150 pips.

Earlier in the day, the data from New Zealand revealed that the Business NZ PMI improved to 63.6 in March from 53.4 in February, showing an expansion of private sector business activity at a robust pace. This reading came in better than the market expectation of 51.4 but was largely ignored by market participants.

DXY struggles to gain traction

On the other hand, the greenback continues to have a difficult time finding demand on Friday. On Thursday, the upbeat macroeconomic data releases from the US provided a boost to market sentiment and put the USD under heavy selling pressure. The US Dollar Index dropped to its lowest level since March at 91.49 and failed to stage a meaningful rebound on Friday with the 10-year US T-bond yield losing more than 1% on the day.

Later in the session, the University of Michigan’s Consumer Sentiment Index, Housing Starts and Building Permits data will be featured in the US economic docket.

In the meantime, the S&P 500 Futures are up 0.15% on the day, suggesting that the USD could remain on the back foot if risk flows remain in control of financial markets.

Technical levels to watch for