NZD/USD: Corrective pullback capped below 0.7150 amid mixed clues
|- NZD/USD consolidates Friday’s losses in a 20-pips range.
- Market sentiment dwindles amid cautious mood ahead of Fed, NZ GDP.
- Upbeat NZIER forecasts joined USD pullback to portray the latest bounce.
- Full markets, Aussie catalysts eyed ahead of US Retail Sales, risk catalysts are the key.
NZD/USD picks up bids to 0.7145, inside a short-term trading range, amid the early Asian session trading on Tuesday. The kiwi pair posted mild gains the previous day as the US dollar buyers took a breather and economic forecasts from the New Zealand Institute of Economic Research (NZIER) printed rosy scenario. Though, tapering fears and a return of Aussie, as well as Chinese, traders after a long weekend could test the recovery moves.
In its latest economic outlook, published the previous day, NZIER said, “Beyond the weaker starting point for GDP growth, the near-term growth outlook has been revised up. On average, annual average growth in GDP is expected to reach 5 percent in March 2022.” The key New Zealand forecaster also said, “Although the longer-term employment growth outlook has been revised lower, the unemployment rate has also been revised lower over the projection reflecting the tighter labor market. Inflation forecasts have been revised higher across the projection.”
While the upward revision to the NZ economic forecasts favored the kiwi pair, a pause in the US dollar index (DXY) rally and cautious mood in the market restricted the moves. Additionally, off in Australia and China offered extra barriers to the NZD/USD momentum.
It’s worth noting that the early signals of the US inflation, per St. Louis Fed and New York Fed, have been in the recovery mode and warrant the traders’ caution ahead of Wednesday’s Federal Open Market Committee (FOMC).
Amid these plays, US 10-year Treasury yields remained on the recovery mode towards 1.50% whereas Wall Street benchmarks closed mixed on Monday.
Moving on, NZD/USD traders will pay attention to how its largest trading partners, namely Australia and China, react to the latest developments. However, fears of the key FOMC and NZ GDP release may restrict the pair’s immediate performance ahead of today’s US Retail Sales for May.
Read: US May Retail Sales Preview: Analyzing major pairs' reaction to previous releases
Technical analysis
Unless breaking a confluence of a three-week-old falling trend line and 50-day SMA, around 0.7190-95, NZD/USD buyers aren’t likely to take the risk. On the contrary, the kiwi pair’s short-term downside is restricted by the recent double-bottom around 0.7115.
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