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  • NZD/USD gained traction for the fourth consecutive session on Thursday.
  • A more hawkish RBNZ continued underpinning the New Zealand dollar.
  • A subdued USD demand remained supportive of the intraday move up.
  • A softer risk tone might cap gains ahead of the US economic releases.

The NZD/USD pair traded with a mild positive bias through the first half of the European session, with bulls still awaiting a sustained move beyond the 0.7300 mark.

Following the previous day’s pullback of over 35 pips from three-month tops, the pair managed to regain some positive traction on Thursday and was supported by a hawkish surprise from RBNZ. At its May meeting held on Wednesday, the Reserve Bank of New Zealand indicated that it could gradually hike interest rates from the third quarter of 2022.

The central bank also acknowledged the recent notable improvement in the economic outlook amid gradual progress in COVID-19 vaccinations and that economic uncertainty is diminishing. This was seen as a key factor that continued acting as a tailwind for the kiwi and allowed the NZD/USD pair to edge higher for the fourth consecutive session on Thursday.

On the other hand, the US dollar struggled to capitalize on its attempted recovery move from the lowest level since January amid dovish Fed expectations. That said, a modest pickup in the US Treasury bond yields helped to put a tentative floor under the greenback ahead of key US economic data coming out on Thursday and Friday.

Apart from this, a cautious tone around the equity markets might further collaborate to cap the upside for the perceived riskier kiwi. Market participants now look forward to the US economic docket, featuring the releases of the Prelim Q1 GDP, the usual Initial Weekly Jobless Claims, Durable Goods Orders and Pending Home Sales.

The data, along with the US bond yields, might influence the USD price dynamics later during the early North American session. 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