NZD/USD trims a part of RBNZ-inspired gains, still well bid around 0.7000 mark


  • RBNZ’s hawkish surprise prompted some short-covering around NZD/USD on Wednesday.
  • COVID-19 jitters weighed on investors’ sentiment and held bulls from placing fresh bets.
  • Hawkish Fed expectations underpinned the USD and collaborated to cap gains for the pair.

The NZD/USD pair trimmed a part of hawkish RBNZ-inspired gains and has now retreated around 30-35 pips from one-week tops. The pair was last seen hovering near the key 0.7000 psychological mark, still up over 0.70% for the day.

The pair witnessed some short-covering move on Wednesday after the Reserve Bank of New Zealand (RBNZ) surprised investors and indicated that it will halt bond buying under the LSAP program by July 23. This, along with a subdued US dollar demand, pushed the NZD/USD pair to an intraday high level of 0.7031.

As investors digested the RBNZ's policy update, the prevalent cautious mood around the equity markets held traders from placing aggressive bets around the perceived riskier kiwi. Investors remain worried about the spread of the highly contagious Delta variant of the coronavirus, which took its toll on the risk sentiment.

Apart from this, expectations that the Fed would tighten its monetary policy sooner than anticipated acted as a tailwind for the greenback. The market expectations were reinforced by Tuesday's hotter-than-expected US consumer inflation figures. This was seen as another factor that capped gains for the NZD/USD pair.

Hence, the key focus will remain on Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday. Powell's remarks on the latest inflation figures should influence market expectations about the Fed's policy outlook. This will drive the USD in the near term and provide a fresh directional impetus to the NZD/USD pair.

Technical levels to watch

NZD/USD

Overview
Today last price 0.6997
Today Daily Change 0.0049
Today Daily Change % 0.71
Today daily open 0.6948
 
Trends
Daily SMA20 0.7006
Daily SMA50 0.7132
Daily SMA100 0.7139
Daily SMA200 0.7071
 
Levels
Previous Daily High 0.701
Previous Daily Low 0.6917
Previous Weekly High 0.7106
Previous Weekly Low 0.6923
Previous Monthly High 0.7289
Previous Monthly Low 0.6923
Daily Fibonacci 38.2% 0.6953
Daily Fibonacci 61.8% 0.6975
Daily Pivot Point S1 0.6907
Daily Pivot Point S2 0.6866
Daily Pivot Point S3 0.6814
Daily Pivot Point R1 0.6999
Daily Pivot Point R2 0.7051
Daily Pivot Point R3 0.7092

 

 

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