- NZD/USD refreshes two-week low following its failure to bounce off 0.7172.
- Fed’s Powell tried to placate bond bears but US Treasury yields jumped to the highest in a year after the speech.
- Series of quakes in North Island ranged alarm for Tsunami, evacuation orders issued.
- NFP becomes the key amid a light calendar, US stimulus update shouldn’t be missed as well.
NZD/USD bears battle a two-week low of 0.7172, currently around 0.7178, during the initial Asian session on Friday. In doing so, the kiwi pair drops for the third consecutive day as Tsunami warnings in New Zealand joined the broad US dollar strength to weigh on the quote.
During late Thursday, New Zealand’s North Island witnessed consecutive three earthquakes that pushed New Zealand National Emergency Management Agency (NEMA) to issue a national emergency warning. As a result, The Guardian came out with the news as saying, “people on the east coast of North Island must move immediately to the nearest high ground, out of all tsunami evacuation zones, or as far inland as possible. Do not stay at home”.
Although no casualties were reported due to the quakes, the fears of the Tsunami add to the already challenging path for the NZD/USD, considering the recent rally in the US Treasury yields and the US dollar.
That said, the US 10-year Treasury yields refreshed the highest since February 2020 with the latest peak of 1.57% even as Fed Chair Jerome Powell rejected bond bears’ dominance on the Fed’s monetary policy. Even so, fears of reflation remain on the front foot amid the expected inflow of huge funds from the US and the UK, due to fiscal stimulus.
Other than the geopolitical problems at home and US dollar strength, the downbeat performance of the Q4 New Zealand Building Work Done also heavy the NZD/USD prices. As per the latest release, the housing data came in as -1.5% QoQ versus +34.6% prior.
Moving on, US employment data for February and progress on US President Joe Biden’s $1.9 trillion stimulus will be the key to watch while keeping eyes on the US Treasury yield moves.
Read: Nonfarm Payrolls Preview: Dollar booster? Three expectation downers pave way for upside surprise
Technical analysis
A clear downside break of 50-day SMA and an 11-week-old support line, respectively around 0.7200 and 0.7215, directs NZD/USD towards February lows near 0.7135.
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