NZD/USD retreats to 0.6840 after reaching fresh six-day high
- US dollar holds negative tone after economic data.
- Improvement in market sentiment supports the kiwi.
- NZD/USD holds far from the one-year low it hit on Tuesday.
The NZD/USD printed a fresh six-day high during the American session at 0.6867 and then pulled back as the US dollar attempted a bounce during Powell’s testimony. The pair dropped to 0.6840. It is modestly higher for the day, which could be seen as positive considering it bottomed on Tuesday, at 0.6772, the lowest in a year.
US data, Powell, USD
The greenback remained mostly unaffected by economic data and more recently rose marginally, during Fed Chair Powell comments. He reiterated the need to move on from the word “transitory” and warned that the risk of higher inflation has move up.
US yields are rising moderately on Wednesday offering only a small support to the dollar across the board. The 10-year stands at 1.48%. In Wall Street, stocks are rising sharply. The Dow Jones gains 1.45% and the Nasdaq by 1.75%.
The ADP report showed private payroll rose by 534K in November, in line with expectations. The ISM Manufacturing Index showed an acceleration in November from 60.8 to 61.1, also near market consensus. Later, the Fed will release the Beige Book and on Friday will be the turn of the NFP report.
Still bearish but…
The primary trend in NZD/USD is bearish. The area around 0.6770 is a key support: horizontal levels and the convergence of the 100 and 200-week moving average. If it remains above, the kiwi could stage a rebound. A weekly close below, should point to more losses over the medium term.
In the very short-term, a firm break above 0.6860 would be a positive development for the kiwi while under 0.6830, the intraday bias would change from positive/neutral to negative.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
