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  • NZD/USD stays on the front foot for third consecutive day after RBNZ.
  • RBNZ matches wide market forecasts to unveil no policy change.
  • Fedspeak, US removal of Xiaomi from blacklist add to risk-on mood.
  • RBNZ press conference, comments from Fed officials and risk catalysts should be observed for fresh impulse.

NZD/USD takes the bids near 0.7250, up 0.46% intraday, following the recent jump on the Reserve Bank of New Zealand’s (RBNZ) status-quo during early Wednesday. Earlier in the day, the kiwi pair benefited from the risk-on mood and the broad US dollar weakness while rejecting New Zealand (NZ) trade data.

That said, the RBNZ matches broad forecasts of announcing no change in the benchmark rate of 0.25%, not to forget any changes in the bond purchase programs. However, the NZ central bank’s statements suggesting a rate hike in late 2022 seem to have propelled the NZD/USD bulls.

Read:  Breaking: RBNZ keeps OCR on hold at 0.25%, NZD/USD jumps

Earlier in the day, NZ Trade Balance marked a notable drop from $1.7B to $0.73B in April. Details for the Imports and Exports were also down. However, the pre-RBNZ caution, amid a broad market optimism, stopped NZD/USD bears from cheering the stated trade data.

Elsewhere, repeated comments from the US Federal Reserve (Fed) officials, backed by recently downbeat US data, seem to have finally convinced traders of no tapering even as the US inflation may rise for the short term. The same joins the US removal of China’s Xiaomi from the blacklist to favor the upbeat market sentiment.

Amid these plays, S&P 500 Futures rise 0.30% despite Wall Street’s downbeat performance while the US 10-year Treasury yields wobble around 1.57% after refreshing the monthly low the previous day. Meanwhile, the US dollar index (DXY) stays pressured near the lowest since early January, tested on Tuesday, to keep the NZD/USD traders positive.

Having witnessed the initial reaction to the RBNZ moves, NZD/USD traders will wait for the RBNZ Press Conference to get details of the NZ central bank’s future actions. Following that, Fedspeak and covid headlines, not to forget trade/geopolitical news, could offer a modest day to the kiwi pair traders.

It should be noted that the RBNZ’s acceptance of the inflation fears and early hints of policy action in late 2021 could buoy the NZD/USD prices. However, the upside moves may fade if the market’s mood changes during the US session, mainly due to the Fedspeak or any other catalysts favoring the risk-off sentiment.

Technical analysis

Failures to cross the 12-day-old falling trend line, around 0.7240, pull NZD/USD back to 0.72015, comprising 21-day SMA. However, any further downside will be challenged by a 50-day SMA level of 0.7140. Overall, the kiwi pair remains in the consolidation mode.