- A combination of factors assisted NZD/USD to gain strong follow-through traction on Tuesday.
- Reduced Fed rate hike bets weighed on the USD and remained supportive amid the risk-on mood.
- The market focus now shifts to the release of the NZ quarterly inflation report, due on Wednesday.
The NZD/USD pair continued scaling higher through the early European session and shot to fresh one-month tops, around the 0.7225-30 region in the last hour.
The pair added to the previous day’s positive move and gained strong follow-through traction for the second consecutive session on Tuesday. The US dollar languished near multi-week lows amid speculations that the Fed will keep interest rates near zero levels for a longer period. This, in turn, was seen as a key factor driving the NZD/USD pair higher.
Apart from this, the underlying bullish tone in the financial markets further undermined the safe-haven greenback and benefitted the perceived riskier kiwi. Even a goodish pickup in the US Treasury bond yields did little to impress the USD bulls or hinder the NZD/USD pair’s ongoing momentum to the highest level since March 18.
Tuesday’s positive move could further be attributed to some technical buying on a sustained strength beyond the 0.7200 round-figure mark. With the latest leg up, the NZD/USD pair has now rallied nearly 300 pips from monthly lows and seems poised to prolong its upward trajectory amid absent relevant market moving economic releases from the US.
Hence, the focus now shifts to the NZ quarterly inflation figures, due on Wednesday. The report comes amid indications that price pressures have been building up domestically and overseas. A hotter-than-expected reading might force the RBBZ to rethink its ultra-dovish policy, which should be enough to provide an additional boost to the NZD/USD pair.
Technical levels to watch
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