- NZD/USD gains ground on Tuesday and hits 1-week highs.
- A modest USD retracement lends some support to the pair, though the upside looks limited.
- Traders now await quarterly employment data from New Zealand before the FOMC on Wednesday.
The pair NZD/USD regains positive traction and extends its steady intraday rise through the early part of the European session on Tuesday. The paar has reached a maximum of a week and a half in the last hour, and The bulls are now looking to take advantage of the momentum to break above the 0.6200 level..
The US dollar pulls back and erodes some of the previous day’s positive move near the almost two-week highs hit on Friday, which in turn is seen as a key factor lending some support to the NZD/USD pair. Traders, however, may refrain from entering aggressive bearish positions around the Dollar. amid uncertainty about the Fed’s rate hike trajectory (Fed). This, along with looming recession risks, could cap any significant gains in the risk-sensitive NZD, at least for now.
In fact, markets have fully priced in another 25 basis point hike at the end of the two-day FOMC meeting on Wednesday and they expect the US central bank to pause its rate hike cycle beyond May. That being said, the US ISM Manufacturing PMI, released on Monday, indicated that inflationary pressures increased last month and raised the possibility of a new rate hike in June. This, in turn, sent US Treasury yields higher and could continue to provide some support for the dollar.
Investors, for their part, continue to concerned about economic hardship from rising borrowing costs. These fears were fueled by the publication on Sunday of weaker Chinese manufacturing data, which keep any optimism in the markets at bay. This could further benefit the dollar as a safe haven and help limit the rise in the NZD/USD pair. Traders may also prefer to stay on the sidelines and wait for the outcome of the FOMC’s two-day policy meeting, scheduled for Wednesday.
Ahead of the key central bank event, traders will be guided by the release of US JOLTS jobs data on Tuesday. This, along with US bond yields and broader risk sentiment, will weigh on the USD and provide some lift to the NZD/USD pair ahead of New Zealand’s quarterly employment details on Wednesday.
NZD/USD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
