“¢ Retracing US bond yields helps regain some positive traction on Friday.
“¢ Cross-driven strength provides an additional boost and remains supportive.
“¢ Traders largely shrugged off a follow-through USD buying interest.
The NZD/USD pair regained positive traction on Friday and jumped back above the 0.6900 handle, reversing previous session’s retracement slide.
On Thursday, the pair initially moved higher and touched an intraday high level of 0.6938 after the latest NZ budget release, which revealed that the NZ government boosted spending and forecasts debt reduction. The up-move quickly ran out of steam amid persistent US Dollar buying interest, further supported by Thursday upbeat Philly Fed Manufacturing Survey.
A modest retracement in the US Treasury bond yields helped offset a follow-through USD upsurge and was seen underpinning demand for higher-yielding currencies – like the Kiwi. The pair also seemed to benefit from some cross-driven strength, stemming out of a sharp retracement slide witnessed around the AUD/NZD cross.
It would now be interesting to see if bulls are able to maintain their dominant position and help the pair to snap the ongoing weekly losing streak seen over the past five weeks.
Traders now look forward to the Fed Governor Lael Brainard’s scheduled speech, due during the NA session, in order to grab some short-term opportunities on the last trading day of the week.
Technical levels to watch
Any subsequent up-move might continue to confront immediate resistance near the 0.6940-50 region, above which the pair is likely to aim towards reclaiming the key 0.70 psychological mark.
On the flip side, retracement back below the 0.6900 handle now seems to find strong support near the 0.6870 region, which if broken might prompt some aggressive selling and pave the way for an extension of the pair’s bearish trajectory.
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