NZD/USD looks for fresh clues to defend 0.7200
- NZD/USD consolidates the previous day’s losses in a 10-pip trading range.
- Market sentiment remains sluggish amid inflation jitters.
- RBA minutes, risk catalysts can offer immediate direction.
NZD/USD wobbles around 0.7210, following a downbeat start to the week, amid an early Asian session on Tuesday. In doing so, the kiwi pair justifies the market’s indecisive stance, mainly led by inflation concerns.
Despite positing upbeat New Zealand Visitor Arrivals for April, -97.4% versus -98.6% prior, not to forget the broad US dollar weakness, the NZD/USD pair dropped on Monday for the first time in the previous three days. The reason could be traced to the sluggish market sentiment as well as downbeat geopolitical and trade updates.
US dollar index (DXY) remained pressured around a three-month low after the US NY Empire State Manufacturing Index for May beat the 23.9 forecast with 24.3 figures and renewed reflation concerns. The mood also ignored comments from Fed Vice Chair Richard Clarida who again pushed for no tapering.
On the other hand, China criticized the US for the United Nations (UN) inability to meddle in the Gaza tussles. Following that America defended Israel while saying that the nation has the rights to defend itself.
It’s worth mentioning that the fears of Indian variant of covid gain momentum in the West while Asian struggles with the virus woes.
Amid these plays, Wall Street closed with mild losses and the US 10-year Treasury yields gained 1.7 basis points (bps) to 1.65%. Further, the S&P 500 Futures drop 0.07% by the press time and justify the inflation jitters.
Given the lack of major data/events at home, NZD/USD traders should rely on the trans-Tasman event, RBA meeting minutes and risk catalysts, for fresh impulse. It should, however, be noted that the inflation concerns can keep the Kiwi pair pressured.
Technical analysis
A 100-pip symmetrical triangle between 0.7240 and 0.7140 restricts short-term NZD/USD moves wherein the 50-day SMA adds strength to the stated range’s support.