NZD/USD clings to gains near session tops, around mid-0.6900s
|- A subdued USD price action assisted NZD/USD to gains some positive traction on Monday.
- Hawkish Fed expectations should act as a tailwind for the USD and cap gains for the major.
- A bank holiday in the US also warrants some caution before placing aggressive bullish bets.
The NZD/USD pair held on to its modest intraday gains through the early part of the European session and was last seen trading near daily tops, just below mid-0.6900s.
The pair managed to gain some positive traction on the first day of a new week and inched back closer to Friday's post-NFP swing highs amid a subdued US dollar price action. Apart from this, the uptick lacked any obvious catalyst and runs the risk of fizzling out rather quickly.
Despite the disappointing headline NFP print, investors still seem convinced that the Fed will begin tapering its bond purchases by the end of 2021. The markets have also been pricing in the possibility of a rate hike in 2022 amid fears of a faster-than-expected rise in inflation.
The market expectations were reinforced by the recent surge in the US Treasury bond yields, which should continue to act as a tailwind for the greenback and cap gains for the NZD/USD pair. In fact, the yield on the benchmark 10-year US government bond shot to four-month tops on Friday.
The US money markets will remain closed on Monday in observance of Columbus Day. This further makes it prudent to wait for a strong follow-through buying before placing aggressive bullish bets around the NZD/USD pair and positioning for any meaningful intraday appreciating move.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.