- NZD/USD witnessed some follow-through selling for the second straight session on Wednesday.
- Rebounding US bond yields, risk-off mood benefitted the safe-haven USD and exerted pressure.
- Investors keenly await the FOMC monetary policy decision before placing fresh directional bets.
The NZD/USD pair maintained its offered tone through the early North American session and dropped to fresh one-week lows, around the 0.6925 region in the last hour.
The pair extended the previous day's rejection slide from the key 0.7000 psychological mark and witnessed some follow-through selling for the second successive session on Wednesday. A combination of factors assisted the US dollar to regain positive traction, which, in turn, exerted some downward pressure on the NZD/USD pair.
Investors remain worried about the potential economic fallout from the fast-spreading Delta variant of the coronavirus. This was evident from the prevalent cautious mood around the equity markets, which was seen as a key factor that acted as a tailwind for the safe-haven USD and drove some flows away from the perceived riskier kiwi.
Apart from this, a goodish pickup in the US Treasury bond yields further underpinned the greenback amid some repositioning trade ahead of the highly-anticipated FOMC monetary policy decision. Given a surprise hawkish shift from the Fed in June, market players will look for fresh clues about the timing of tapering amid surging inflation in the US.
The announcement will be followed by the post-meeting press conference, where comments by Fed Chair Jerome Powell will play a key role in influencing the near-term USD price dynamics. This, along with developments surrounding the coronavirus saga, should assist investors to determine the next leg of a directional move for 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
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.