NZD/USD keeps the red below 0.7200 mark, downside seems limited
|- Worries about soaring COVID-19 cases weighed on the perceived riskier kiwi.
- The USD languished near multi-week lows and helped limit losses for NZD/USD.
- Reduced Fed rate hike bets, declining US bond yields undermined the greenback.
The NZD/USD pair maintained its offered tone through the early European session, albeit has managed to recover few pips from daily lows. The pair was last seen trading just below the 0.7200 mark, down around 0.20% for the day.
The pair witnessed some selling during the first half of the trading action on Thursday and eroded a part of the previous day's positive move, led by NZ consumer inflation figures. Renewed fears about another dangerous wave of coronavirus infections in some countries continued weighing on investors' sentiment. This, in turn, was seen as a key factor that drove flows away from the perceived riskier kiwi.
The downside, however, remained cushioned, at least for the time being, amid the prevalent bearish sentiment surrounding the US dollar. Expectations that the Fed will keep interest rates near zero levels for a longer period kept the USD depressed near multi-week lows. Apart from this, a fresh leg down in the US Treasury bond yields further undermined the greenback and helped limit losses for the NZD/USD pair.
Even from a technical perspective, acceptance above 100-day SMA and the emergence of some dip-buying supports favours bullish traders. That said, it will still be prudent to wait for some follow-through buying beyond weekly swing highs, around the 0.7230 region before positioning for any further appreciating move. The NZD/USD pair might then accelerate the momentum and aim to reclaim the 0.7300 round-figure mark.
Market participants now look forward to the US economic docket, featuring the only release of the usual Initial Weekly Jobless Claims. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities.
Technical levels to watch
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