NZD/USD climbs to fresh monthly highs, closes in on 0.6700
- NZD/USD is rising for the fourth straight day on Thursday.
- Broad-based USD weakness help NZD/USD preserve its bullish momentum.
- Focus shifts to key macroeconomic data releases from the US.
The NZD/USD pair posted small daily gains on Thursday and extended its advance to a fresh monthly high of 0.6694. As of writing, the pair was up 0.77% on a daily basis at 0.6688.
DXY plummets below 93.00 on Friday
The broad-based selling pressure surrounding the greenback seems to be providing a boost to NZD/USD on Friday. After FOMC Chairman Jerome Powell announced that the Fed will target average inflation as its new strategy, the US Dollar Index (DXY) fluctuated in a wide range, suggesting that investors struggled to make up their mind with respect to what that means for the USD.
However, the DXY turned south and slumped a 10-day low of 92.28 on Friday and was last seen losing 0.67% on the day at 92.37. Commenting on the potential impact of the Fed's new strategy on the USD, "this poses a challenge for the USD from a cyclical perspective and gives more credence to chip away at the USD's longstanding overvaluation," said TD Securities analysts. "Tactically, USD shorts are deeply entrenched, but that doesn't mean it is due for a reversal."
Later in the day, Personal Spending, Personal Income and Personal Consumption Expenditures (PCE) Price Index data from the US will be looked upon for fresh impetus. However, these readings are unlikely to trigger a significant market reaction and the USD seems to be looking to finish the week on the back foot.
Technical levels to watch for