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  • NZD/USD regained positive traction on Thursday and recovered a part of the overnight losses.
  • Retreating US bond yields kept the USD bulls on the defensive and extended some support.
  • A softer risk tone might hold bulls from placing aggressive bets around the perceived riskier kiwi.

The NZD/USD pair edged higher through the early European session and was last seen trading near daily tops, with bulls now eyeing a move beyond the 0.7200 round-figure mark.

The pair managed to regain positive traction on Thursday and recovered a part of the previous day’s hawkish FOMC minutes-inspired losses to mid-0.7100s, or four-day lows. Despite hints that the Fed has begun debating on QE tapering, the US dollar struggled to gain any meaningful traction amid a modest pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the NZD/USD pair.

The kiwi got an additional boost after New Zealand Finance Minister Robertson – while presenting the annual Budget – predicted higher growth and a lower unemployment rate going forward. This was seen as another factor that acted as a tailwind for the NZD/USD pair. That said, a generally softer tone around the equity markets might hold bulls from placing aggressive bets and cap the upside for the perceived riskier New Zealand dollar.

Looking at the technical picture, the NZD/USD pair has been oscillating in a broader trading range over the past one week or so. This further warrants some caution before positioning for any meaningful upside. Hence, it remains to be seen if bulls are able to capitalize on the move or the pair meets with some fresh supply at higher levels as market participants now look forward to the US macro data for some meaningful trading impetus.

Thursday’s US economic docket features the release of the Philly Fed Manufacturing Index and the usual Initial Weekly Jobless Claims later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus. Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the NZD/USD pair.

Technical levels to watch


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