Apr 27, 2021
- A goodish pickup in the USD demand prompted some selling around NZD/USD on Tuesday.
- COVID-19 jitters benefitted the safe-haven USD and weighed on the perceived riskier kiwi.
- The US Consumer Confidence Index eyed for some impetus ahead of FOMC on Wednesday.
The NZD/USD pair extended its steady intraday descent and refreshed daily lows, around the 0.7200 mark during the first half of the European session.
The pair witnessed some selling on Tuesday and has now eroded a part of the previous day’s goodish positive move to the highest level since March 18. This marked the first day of a negative move in the previous three and was sponsored by the emergence of some buying around the US dollar.
Investors now seem worried that surging COVID-19 infections in some countries, including India and Japan, could derail the global economic recovery. This, in turn, drove some haven flows towards the greenback and was seen as a key factor exerting pressure on the perceived riskier kiwi.
Apart from this, the USD uptick lacked any obvious catalyst and is likely to remain capped amid expectations that the Fed will keep interest rates low for a longer period. Hence, the key focus will remain on the latest FOMC monetary policy update, scheduled to be announced on Wednesday.
Heading into the key event risk, some repositioning trade might influence some volatility around the NZD/USD pair. In the meantime, traders are likely to take cues from Tuesday’s release of the Conference Board’s US Consumer Confidence Index, due later during the early North American session.
The data, along with the broader market risk sentiment, might influence the USD price dynamics. This, in turn, should provide some impetus to the NZD/USD pair and allow traders to grab some short-term opportunities.
Courtesy of the Forex Mix