- NZD/USD continued gaining traction for the sixth consecutive session and shot to fresh multi-year tops on Thursday.
- Powell’s dovish comments, the upbeat market mood weighed heavily on the safe-haven USD and remained supportive.
- Investors now look forward to the Prelim US Q4 GDP report and Durable Goods Orders data for a fresh trading impetus.
The USD selling picked up pace during the European session and pushed the NZD/USD pair further beyond mid-0.7400s, to the highest level since August 2017.
The pair added to the previous day's post-RBNZ strong gains and continued scaling higher for the sixth consecutive session on Thursday. The US dollar witnessed some heavy selling through the first half of the trading action, which, in turn, was seen as a key factor fueling the ongoing positive momentum.
The greenback was being weighed down by Fed Chair Jerome Powell's dovish policy stance. During the second day of congressional testimony on Wednesday, Powell reassured that interest rates would stay low for a long time and that the Fed will keep buying bonds to support the US economic recovery.
Apart from this, the prevalent risk-on environment further undermined the USD's relative safe-haven status and benefitted the perceived riskier kiwi. Investors remain optimistic about a strong global economic recovery amid the progress in COVID-19 vaccinations and a massive US fiscal spending plan.
In the latest positive developments, the US Food and Drug Administration indicated that it could grant emergency use approval to Johnson & Johnson's COVID-19 vaccine by the end of this week. Separately, House Majority Leader Steny Hoyer said that the House will vote on the US President Joe Biden's proposed $1.9 trillion pandemic relief package on Friday or over the weekend.
Meanwhile, the reflation trade, along with rising inflation expectations pushed the yield on the benchmark 10-year US government bond beyond 1.40% for the first time since February 2020. Rallying US bond yields, however, failed to impress the USD bulls or hinder the NZD/USD pair's strong move up.
Market participants now look forward to the US economic docket, highlighting the release of the Prelim (second estimate) Q4 GDP print and Durable Goods Orders. Apart from this, speeches by influential FOMC members will influence the USD and produce some trading opportunities around the NZD/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
How will US Dollar react to Q1 GDP data? – LIVE
The US' GDP is forecast to grow at an annual rate of 2.5% in the first quarter of the year. The US Dollar struggles to find demand as investors stay on the sidelines, while waiting to assess the impact of the US economic performance on the Fed rate outlook.
EUR/USD holds gains above 1.0700, as key US data loom
EUR/USD holds gains above 1.0700 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.