Dramatic Buying in NZD
The NZD/USD pair extended its previous bullish rally and drew further bids above the 0.7017 level. The NZD/USD was supported by the sharp upticks in the AUD/USD pair following the Reserve Bank of Australia's policy announcements, which helped the positively-correlated NZD/USD pair.
Apart from this, the broad-based U.S. dollar weakness was also seen as one of the key factors that boost the NZD/USD currency pair. The downticks in the U.S. dollar have appeared after Federal Reserve Chairman Jerome Powell indicated last week that interest rate hikes were still a long way away. Thus, the weakness in the dollar seems to be allowing the NZD/USD currency pair to preserve its momentum.
As of writing, the NZD/USD currency pair price is trading at 0.7014 and consolidating in the range between 0.6964 - 0.7019. Moving on, the traders seem cautious to place any strong position ahead of N.Z. Unemployment Rate data is expected to drop further to 4.5% in Q2 2021 after unexpectedly falling to 4.7% in Q1.
Despite the growing tensions over the coronavirus (COVID-19) cases, the market trading sentiment extended its previous-day positive performance and remained well supported on the day. This was witnessed by the positive attitude of Asia-Pacific stocks and gains in the S&P 500 Futures, highlighting the risk-on mood. As of today, the S&P 500 Index is rose by 0.45% at 4,415. While the Dow Jones Industrial Average is up 0.43% at 35,082 and the Nasdaq Composite is gaining positive traction near 14,995.
However, the market risk-on mood could be attributed to the progressing discussions over U.S. President Joe Biden's infrastructure spending, which instantly positively impacted the market trading sentiment and contributed to the safe-haven U.S. dollar losses.
At the USD front, the broad-based U.S. dollar extended its previous-day downward rally and dropped further on the day as the market's bullish bias tends to undermine the safe-haven dollar.
The Fed's dovish stance in the recent conference has also played a significant role in undermining the U.S. dollar. Federal Reserve Chairman Jerome Powell's announcement that "interest rate hikes were still a long way away. In addition to this, the sluggish US PMI data put some further burden around the U.S. dollar. Thus, the declines in the U.S. dollar were seen as one of the critical factors that help the NZD/USD pair stay bid.
NZD/USD Intraday Technical Levels
Support Resistance
0.6980 0.7036
0.6943 0.7055
0.6924 0.7092
Pivot Point: 0.6996
NZD/USD - Technical Outlook
The NZD/USD pair is trading with a bullish trend at the 0.7050 level. Taking a look at the MACD, the pair has entered the overbought zone, and typically in such situations, the pair starts exhibiting a bearish correction. The investor's major focus stays on the 0.7065 resistance level as a bullish crossover can expose the NZD/USD pair towards the 0.7095 level.
The overbought NZD/USD pair can show a bearish correction until a 23.6% Fibonacci retracement level of 0.7850 and 38.2% Fibonacci correction level of 0.7034 level. On Wednesday, the investor's focus will stay on the U.S. ADP figures as this may offer them further clues about the NZD/USD trend. All the best!
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