- NZD/USD gained traction for the second successive day and shot to a fresh YTD high on Tuesday.
- The uncertainty over Ukraine underpinned commodities and benefitted the resources-linked kiwi.
- Signs of stability in the equity markets undermined the safe-haven USD and remained supportive.
The NZD/USD pair climbed to a fresh YTD top during the early part of the European session and is now looking to extend the momentum beyond the 0.7000 psychological mark.
The pair build on the goodish overnight rebound from the very important 200-day SMA and gains strong follow-through traction for the second successive day on Tuesday. The prospect of more Western sanctions on Russia over its alleged war crimes in Ukraine continued acting as a tailwind for commodity prices. This, in turn, was seen as a key factor that benefitted resources-linked currencies, including the kiwi.
On the other hand, signs of stability in the equity markets dented demand for traditional safe-haven assets and failed to assist the US dollar in capitalizing on its gains recorded over the past three days. This boosted the NZD/USD pair and contributed to the ongoing momentum to the highest level since November 2021. A combination of factors should limit the USD losses and cap the major.
The market sentiment remains fragile amid the prospect of more Western sanctions on Russia over its alleged war crimes in the Ukrainian town of Bucha. Apart from this, growing acceptance that the Fed would adopt a more aggressive policy stance to rein in inflationary pressures should act as a tailwind for the greenback. The markets have been pricing in a 100 bps Fed rate hike move over the next two meetings.
The hawkish Fed expectations remained supportive of high US Treasury bond yields, which supports prospects for the emergence of some USD dip-buying. However, the underlying bullish sentiment surrounding the buck did little to hinder the NZD/USD pair momentum as traders look forward to the US ISM Services PMI for a fresh impetus. The key focus will remain on the FOMC minutes, due for release on Wednesday.
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.