NZD/USD inches closer to 0.7000 on cautious optimism amid subdued markets

NZD/USD stays on the front foot around 0.6985, up 0.27% intraday, amid early Friday. In doing so, the kiwi pair reverses the previous day’s downside move near the day’s high as market sentiment improves during a sluggish Asian session.

Although the off in Japan and a light calendar elsewhere in Asia bore traders, optimism among the US policymakers over the stimulus and a lack of worrisome numbers from some of the crucial Aussie states back the pair buyers.

Also, New Zealand’s comparatively better covid conditions than the rest of the global and increasing odds of RBNZ rate hike during late 2021, to be the first developed back in that action, favor NZD/USD bulls.

Australia’s Victoria registers half of the covid counts to 14 but worrisome signs erupt from New South Wales (NSW) as Premier Gladys Berejiklian said, per ABC News, “The numbers are not going in the direction we were hoping”. On the same line, the virus-led death tolls are rising in the UK with scientists warning of the return of the lockdown in three weeks.

To safeguard the nation, New Zealand Prime Minister Jacinda Ardern suspended quarantine free travel with Australia for eight weeks.

It should be noted that the US vaccine panel’s support for COVID-19 booster shots and policymaker’s optimism over further stimulus, not to forget the relief in altering the US debt limits, also favor the sentiment.

Amid these plays, S&P 500 Futures rise 0.35% intraday whereas the US 10-year Treasury yields remain positive around 1.28% by the press time.

Moving on, NZD/USD traders will keep their eyes on the risk catalysts and wait for the US PMIs for July for fresh impulse. However, the bulls are likely to keep the reins as RBNZ is ahead of the curve.

Read: US Markit PMIs Preview: Pre-weekend dollar boost? Downbeat figures could exacerbate risk-off mood

Technical analysis

In addition to the 21-DMA near 0.6990, a two-month-old descending resistance line around 0.7010 also challenges NZD/USD bulls before directing them to the key 200-DMA hurdle of 0.7088. Meanwhile, 0.6920 becomes a near-term important support to watch during the quote’s pullback moves. It’s worth noting that bullish MACD and sturdy RSI back the buyers of late.