NZD/USD: RBNZ’s Orr-led recovery capped by 0.6400 ahead of Powell

• Stronger US dollar index keeps the NZD/USD recovery in check, as Treasury yields rally.
• Kiwi off multi-year lows on RBNZ’s Governor Orr comments, risk-on sentiment.
• Markets await Fed Chair Powell’s testimony for fresh dollar trades.

The NZD/USD pair is seen consolidating the Asian recovery below the 0.64 handle, fuelled by unexpectedly less dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr delivered earlier today.

RBNZ Orr: Rate cut reduces probability of having to do more later

Orr said that the central bank’s 50 bps rate cut reduces probably of having to do more while downplaying expectations of the bank resorting to unconventional monetary policy tools.

On Orr’s comments, the Kiwi caught a strong bid-wave and staged a recovery from near 2.5-year lows of 0.6362. Markets shrugged off a drop in New Zealand’s Q2 Retail Sales numbers and paid no heed to RBNZ policymaker Hawkesby’s concerns on low price pressures.

However, the recovery attempts continue to run into stiff resistances stacked up just below the 0.64 handle, keeping the prices trapped in a narrow range around the 0.6785/80 level. The upside lacks follow-through, in the wake of a broad-based rally in the US dollar. The greenback is seen tracking the surge in the Treasury yields across the curve amid a better risk environment.

Further, the bulls remain cautious ahead of a slew of Fedspeak, with Fed Chair Powell’s speech to remain the main focal point. Markets await fresh hints on the US interest rates outlook amid looming US-China trade risks and an improving US economy.

NZD/USD Technical levels to watch