- NZD/USD bulls are stepping back in and eye the weekly M-formation's neckline near 0.6930.
- The US dollar and US yields are the driving forces mid-week.
NZD/USD was under pressure on Tuesday but is making an advance into the closing hours of the New York session, trading at 0.6773 after climbing from a low of 0.6752. The pair had been as high as 0.6808 at the start of the day before an almightly surge in the greenback.
benchmark US Treasury yields jumped to two-year highs and major equity market indexes dropped more than 1% on Tuesday as traders braced for the Federal Reserve to be more aggressive in tightening monetary policy to tackle inflation.
The US dollar struck a six-day high following the jump in Treasury yields. The US 10-year yield also hit a two-year peak of 1.866% overnight. In line with Treasury yields, the dollar strengthened against a basket of currencies, hitting a one-week high of 95.83 DXY.
As for risk appetite, the Dow Jones Industrial Average sank by over 1.9% to 35,262 and the S&P 500 dropped 1.9% to 4,569.82. The Nasdaq Composite slumped 2.31% to 15,238. All sectors were in the red as volatility remains in play at the start of the year, weighing on the high beat currencies and dollar bloc.
''While AUD and NZD have been the two worst-performing G10 currencies since the start of the year, they fared better than the EUR and CAD overnight. All in all, it’s a picture of volatility, and while not extreme, that theme is likely to carry through the year as global central banks look to tighten and rein in cash liquidity,'' analysts at ANZ bank argued.
''Yesterday’s NZIER QSBO data added fuel to the debate around how much more tightening might be delivered here. The survey pointed to a stretched labour market and to ongoing inflation pressures, but in a world where everyone else is also tightening, that may not help the NZD.''
NZD/USD techncial analysis
The bird is going through what could be a period of accumulation per the weekly chart's M-formation and neckline at 0.6930 as the target:
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