- NZD/USD gained positive traction for the fourth consecutive session on Thursday.
- The risk-on mood, a subdued USD demand remained supportive of the move up.
- A pickup in the US bond yields might help limit the USD downfall and cap gains.
The NZD/USD pair edged higher through the early European session and climbed to the 0.7065 region in the last hour, back closer to the weekly tops set on Wednesday.
A combination of factors assisted the NZD/USD pair to gain traction for the fourth consecutive session on Thursday, with bulls looking to build on this week's solid rebound from multi-month lows. The underlying bullish sentiment in the financial markets was seen as one of the key factors that benefitted the perceived riskier kiwi. Apart from this, a subdued US dollar price action extended some additional support to the major.
The USD, so far, has struggled to capitalize to build on last week's post-FOMC strong positive move amid mixed signals on the US inflation. The Fed Chair Jerome Powell said on Tuesday that inflation is rising due to pent-up demand and supply bottlenecks and that the price pressures should ease on their own. Separately, two Fed officials said on Wednesday that the high inflation in the US would last longer than expected.
Atlanta Fed President Raphael Bostic said on Wednesday that inflation will remain well above the Fed's 2% target and that he now expects interest rates need to rise in late 2022. Adding to this, Fed Governor Michelle Bowman indicated that the recovery in the labour market and spending on goods and services have contributed to the upward pressure on consumer prices. Both, however, agreed that the price increase will prove temporary.
That said, a modest uptick in the US Treasury bond yields acted as a tailwind for the greenback. This, in turn, could hold traders from placing any aggressive bets. This, in turn, might keep a lid on any runaway rally for the NZD/USD pair, at least for the time being. Market participants now look forward to a slew of important US macro data for some short-term trading opportunities later during the early North American session.
The US economic docket highlights the release of the final Q1 GDP print, Durable Goods Orders, the usual Initial Weekly Jobless Claims and Goods Trade Balance figures for May. This, along with the US bond yields and a scheduled speech by New York Fed President John Williams, will influence the USD price dynamics. Apart from this, the broader market risk sentiment might also provide some impetus to the NZD/USD pair.
