NZD/USD struggles to hold above 0.6500 as DXY climbs above 98

• Unemployment Rate in New Zealand fell to 4% in fourth quarter.
• Broad-based USD strength keeps pair’s gains limited on Wednesday.
• Coming up: ADP Employment Change and ISM Non-Manufacturing PMI from US.

The NZD/USD pair received a boost from the upbeat employment data from New Zealand and easing coronavirus fears on Wednesday and advanced to a daily high of 0.6503 before starting to consolidate its gains ahead of the American session. As of writing, the pair was up 0.1% on the day at 0.6495.

NZD capitalizes on jobs report

The data published by Statistics New Zealand revealed that the Unemployment Rate in the fourth quarter dropped unexpectedly to 4% from 4.2% and helped the kiwi outperform its rivals.

Commenting on the data, “overall, today’s results will be a positive surprise for the Reserve Bank in terms of its two mandates: price stability and supporting maximum sustainable employment,” said Westpac analysts. “That will leave next week’s Monetary Policy Statement attempting the strike a balance between a stronger picture of the domestic economy and the rapidly developing risks in the global environment.”

On the other hand, the sharp upsurge witnessed in the US Treasury bond yields continues to help the greenback preserve its strength. The 10-year US T-bond yield added nearly 5% on Tuesday and is up 2% on Wednesday, allowing the US Dollar Index to push beyond 98 for the first time since January 29th.

In the second half of the day, ADP Employment Change, ISM Non-Manufacturing PMI and Markit Services PMI data will be featured in the US economic docket.

Technical levels to watch for