NZD/USD technical analysis: 50% of the recent drop erased, NZ-US yield spreads rise

NZD/USD has recovered 50% of the recent drop.
The Asian session gains are backed by rising NZ-US yield spread.

Omkar Godbole FXStreet Contributor

NZD/USD is solidly bid this Thursday morning in Asia, courtesy of the US Federal Reserve's dovish forward guidance on interest rates and the resulting rise in the New Zealand (NZ)-US bond yield differentials.

The currency pair is currently trading at 0.6568, representing 0.50% gains on the day, having hit a high of 0.6582 earlier today. More importantly, the Kiwi has retraced nearly 50% of the drop from the June 7 high of 0.6681 to the low of 0.6487 seen on June 14.

The uptick is backed by the NZD-bullish developments in the bond markets. For instance, the spread between the yields on the 10-year NZ and US government bonds is currently seen at -41 basis points – up 7 basis points from Wednesday's low of -0.47 basis points.

Looking forward, a break above 0.6681 is needed to confirm a bearish-to-bullish trend change.

Daily chart

Trend: Bullish reversal above 0.6681

Pivot levels

1. R3 0.6613
2. R2 0.6588
3. R1 0.6563
PP 0.6538
1. S1 0.6513
2. S2 0.6488
3. S3 0.6463

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD hovers around 1.1850 ahead of FOMC Minutes

EUR/USD stays on the back foot around 1.1850 in the European session on Wednesday, pressured by renewed US Dollar demand. Traders now look forward to the Minutes of the Fed's January monetary policy meeting for fresh signals on future rate cuts.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.