NZD/USD reverses modest intraday losses, turns flat around 0.6760-65 region
|- A modest USD strength prompted some intraday selling around NZD/USD on Wednesday.
- A generally positive risk tone benefitted the perceived riskier kiwi and helped limit losses.
- Investors now look forward to the US economic docket for some short-term trading impetus.
The NZD/USD pair reversed a major part of its intraday losses and was last seen hovering near the top end of its daily trading range, around the 0.6760-65 region.
The pair struggled to capitalize on the previous day's recovery move from the 0.6700 mark or the YTD low instead, witnessed some selling during the early part of the trading on Wednesday amid a modest US dollar strength. That said, a generally positive tone helped limit deeper losses for the perceived riskier kiwi.
Having posted some losses over the past two trading sessions, the greenback attracted some buying on Wednesday and continued drawing support from the Fed's hawkish outlook. It is worth recalling that the so-called dot plot indicated that the Fed officials expect to raise the fed funds rate at least three times next year.
The USD bulls, however, refrained from placing aggressive bets amid a fresh leg down in the US Treasury bond yields. Apart from this, the optimism over the prospects that the current vaccines may be more effective than first thought in fighting the Omicron variant of the coronavirus acted as a tailwind for the NZD/USD pair.
The mixed fundamental backdrop warrants some caution before placing directional bets amid relatively thin liquidity conditions heading into the end-of-year holiday season. Market participants now look forward to the US economic docket, highlighting the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index.
This, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the NZD/USD pair. Traders will further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment to grab some short-term opportunities around the major.
Technical levels to watch
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