NZD/USD is near two-week high just below 0.6700 while traders await US CPI
- NZD/USD gained positive traction for the third straight day despite lacking bullish conviction.
- A positive risk tone extended support for the perceived riskier kiwi amid muted USD demand.
- Traders appeared cautious, preferring to wait on the sidelines ahead of the important US CPI report.
The NZD/USD pair traded with a slight positive bias during the early European session and was last seen near a two-week high just below the 0.6700 level.
The pair was up for the third straight day on Thursday and may now be looking to build on its recent bounce off the 0.6530 area or the lowest since September 2020. A generally positive sentiment in equity markets proved to be a key factor, benefiting the perceived riskier kiwi amid subdued US dollar demand.
However, the uptrend lacked continuation or bullish conviction amid rising bets of a 50 basis point Fed rate hike in March, which continued to act as a tailwind for the greenback. Markets seem confident that the US Federal Reserve will tighten monetary policy faster than expected to combat stubbornly high inflation.
As such, market focus will remain on the latest US consumer inflation numbers, to be released later during the early North American session. Ahead of the key release, traders may refrain from placing aggressive directional bets, which could further help contain any significant upside potential for the NZD/USD pair, at least for now.
Thursday’s US economic list also includes the release of the usual weekly initial jobless claims. This, along with US bond yields, would affect USD price momentum and give some lift to the NZD/USD pair. Traders will continue to look to the broader market risk sentiment to take advantage of some near-term opportunities.