Search ForexCrunch

   “¢   Surging US bond yields/risk-off mood drag the pair below the 0.65 handle.
   “¢   The USD bullish momentum takes a brief pause and extends some support.

The NZD/USD pair remained under some selling pressure on Thursday and finally broke below the key 0.6500 psychological mark to a fresh 32-month low.

Yesterday’s upbeat US economic data – ADP report and ISM non-manufacturing PMI, sparked a fresh wave of US Dollar buying interest and weighed heavily on the major.

Adding to this, hawkish comments by the Fed Chair Jerome Powell, saying that rates may well need to go beyond neutral, helped the US Treasury bond yields to break higher and remained supportive of the strong USD upsurge.  

In fact, the benchmark 10-year yields have climbed above the 3.20% for the first time since 2011, which set off some nervous tones across global equity markets and further dented the already weaker sentiment around perceived riskier currencies – like the Kiwi.

The pair kept losing ground on Thursday and dropped to an intraday low level of 0.6484, the lowest since early Feb. 2016. Meanwhile, the strong USD bullish momentum took a brief pause and was now seen as the only factor lending some support, at least for the time being.

In absence of any major market moving economic releases, the pair remains vulnerable to extend the downward trajectory amid prevalent strong bullish sentiment surrounding the buck and growing expectations for a stronger NFP report on Friday.

Technical levels to watch

A follow-through selling has the potential to continue dragging the pair further towards 0.6445 intermediate support en-route the 0.6410-0.6400 region. On the flip side, attempted recovery moves might now confront fresh supply near the 0.6520-25 region, above which a bout of short-covering could lift the pair back towards the 0.6600 handle.