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NZD/USD trims post-Fed gains above 0.7200 as New Zealand Q4 GDP disappoints

  • NZD/USD drops around 20 pips following the surprise drop in NZ GDP.
  • New Zealand’s fourth-quarter (Q4) GDP came in -1.0% versus +0.1% QoQ forecasts.
  • Post-Fed risk-on mood battles geopolitical headlines suggesting the US tussles with China, North Korea and Iran to probe the bulls.
  • Aussie data, risk catalysts will be the key for now.

NZD/USD pushes the bulls back while declining over 20 pips around 0.7230 after New Zealand (NZ) Q4 GDP disappoints kiwi optimists during the early Thursday morning in Asia. Also favoring the consolidation are the challenges to the risks and hidden hints of a gradual pick-up in rates after a few years in the Fed statement.

NZ GDP probes kiwi bulls…

Although lockdown in Auckland was a wild card that played its role in smashing hopes of no major losses in the GDP, the -1.0% QoQ reading, versus +0.1% forecast and revised down 13.9% prior, is a surprise for the NZD/USD buyers.

Read: New Zealand GDP Q4: Posts a1.0% fall vs 0.2% expected, Kiwi giving back gains

The kiwi pair recently cheered the US Federal Reserve’s inability to provide clear hints of sooner rate hikes even as the upward revision to the economic forecasts was a welcome sign. It should, however, be noted that seven policymakers see a lift-off in the fed funds rate from zero in 2023 versus five in December. Hence, reflation fears aren’t down and may return on the re-read of the dot-plot.

Also likely to challenge the pair could be fresh US tussles with China, North Korea and Iran as well as the European countries’ rejection to use AstraZeneca covid vaccine. On the contrary, the US stimulus and American Secretary of State Antony Blinken’s Asia trip keep the buyers hopeful.

Amid these plays, Wall Street managed to end Wednesday on a positive side despite earlier losses whereas the US 10-year Treasury yield refreshed the 13-month top.

Having witnessed the initial reaction to the NZ data, Australia’s employment figures are left to observe for the NZD/USD traders. Though, major attention will be given to the market’s second thoughts on the Fed’s latest action, actually inaction, as well as the challenges to the sentiment mentioned above. Against this backdrop, the kiwi pair is likely to retrace the Fed-led gains unless any surprise recalls the bulls.

Technical analysis

NZD/USD couldn’t break 21-day SMA, at 0.7245 now, on a daily closing basis, despite the latest rally, which in turn signals a pullback. However, 50-day SMA near 0.7215 can test the bears before directing them to an ascending trend line from December 21, 2020, currently around 0.7115.

Additional important levels

Overview
Today last price0.723
Today Daily Change44 pips
Today Daily Change %0.61%
Today daily open0.7186
 
Trends
Daily SMA200.7243
Daily SMA500.7216
Daily SMA1000.7093
Daily SMA2000.6845
 
Levels
Previous Daily High0.7207
Previous Daily Low0.7168
Previous Weekly High0.7241
Previous Weekly Low0.7103
Previous Monthly High0.7466
Previous Monthly Low0.7135
Daily Fibonacci 38.2%0.7183
Daily Fibonacci 61.8%0.7192
Daily Pivot Point S10.7166
Daily Pivot Point S20.7147
Daily Pivot Point S30.7127
Daily Pivot Point R10.7206
Daily Pivot Point R20.7226
Daily Pivot Point R30.7245

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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