NZD/USD extends its gains for two straight days steady at around 0.6630s
- Despite US equities recording losses, the NZD rises courtesy of improved market sentiment.
- The USD remains offered across the pond, and the DXY sheds 0.15%.
- The NZD/USD is downward biased but, once 0.6600 was reclaimed, a move towards 0.6700 is on the cards.
The New Zealand dollar advances sharply during the North American session, amid European stocks closing in the red, while US equity indices record losses. At the time of writing, the NZD/USD is trading at 0.6633.
During the day, the greenback has been under intense selling pressure. The US Dollar Index, a gauge of the buck’s value against a basket of six rivals, slides 0.15%, sitting at 96.39, courtesy of a risk-appetite increase in the last couple of days, except for US equities.
The US economy continues in expansion territory
The US economic docket featured the release of the ISM Manufacturing indicators for January on its final reading. The Manufacturing PMI came at 57.6 higher than the 57.5 foreseen by analysts. Although a tenth lower than December’s reading (revised), it showed the resilience of the US economy. Worth noting is the jump in Manufacturing Prices, which crushed expectations and the previous reading, up to 76.1 from 68.1 estimations and 68.2 in December.
That said, it further cements the US central bank hawkish pivot. However, regarding the labor market, Thursday’s Initial Jobless Claims and Friday’s Nonfarm Payrolls could shed light on how it is positioned in the US economy.
On Tuesday, the Philadelphia Fed President Patrick Harker crossed the wires. He commented that he expects a rate hike of 25 basis points in the March meeting, and he foresees at least four increases to the FFR. Harker said that the Fed is not behind the curve and noted that it could begin the Quantitative Tightening (QT) once the Federal Funds Rates (FFR) hit 1% to 1.25%.
Fed speaking continues with St. Louis Fed President Bullard at 19:30 GMT
In the Asian session, the New Zealand economic docket would feature employment figures. HILFS Unemployment Rate is expected at 3.4%, while the Labor Cost Index in a (QoQ) and (YoY) is foreseen at 0.9% and 2.9%, respectively.
NZD/USD Price Forecast: Technical outlook
The NZD/USD is trending downwards, once 0.6700 gave way to USD bulls. The daily moving averages (DMA) show that the downtrend remains intact but, the price action of the last two days might suggest a leg-up is underway and can reach the abovementioned price level.
If the NZD/USD challenges the 0.6700, the next target for NZD bulls would be January 6 low previous support-turned-resistance at 0.6733, immediately followed by the 50-DMA at 0.6768.
Contrarily, and the path of least resistance as the NZD/USD current trend is to the downside, the first support would be 0.6600. A breach of the latter would expose January 28 high, previous resistance-turned-support at 0.6588, followed by the YTD low at 0.6529.