- NZD/USD bounces off intraday low but remains depressed for the second consecutive day.
- Cautious sentiment ahead of the key event, light calendar at home restrict moves.
- Australia Q1 CPI, FOMC language will be the key.
NZD/USD portrays a corrective pullback while bouncing the intraday low to 0.7206 amid Wednesday’s Asian session. Even so, the kiwi pair remains on the back foot amid cautious markets.
Strong US data and the highest growth in the US 10-year Treasury bond yields backed the US dollar’s recovery moves on Tuesday. However, the traders remained confused as risk catalysts flashed mixed signals, which in turn portrayed inaction by the Wall Street benchmarks.
The coronavirus (COVID-19) crisis in Japan and India poses serious challenges to global recovery hopes. Also on the same line could be the uneven progress of the covid vaccinations in the West.
Alternatively, easy travel plans from Europe, the US and the UK join expectations of removing further activity restrictions, initially levied to tame the virus, to keep the investors hopeful.
Against this backdrop, S&P 500 Futures struggle for a fresh direction while commodities wobble by the press time.
Moving on, a lack of major catalyst at home keeps NZD/USD at the mercy of Australia’s Q1 Consumer Price Index (CPI) figures, expected 1.4% YoY versus 0.9% prior. Although upbeat forecasts for the Aussie data may propel the kiwi pair’s latest bounce, the pre-Fed trading lull and haywire risk catalysts could confuse the traders.
Read: AUD/USD: Pressured below 0.7800 on cautious sentiment ahead of Australia Q1 CPI, FOMC
Technical analysis
NZD/USD pullback from 0.7245 battles a two-week-old support line around the 0.7200 threshold, a break of which can drag the pair further down towards a 100-day SMA level of 0.7162.
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