NZD/USD fails to hold onto daily gains, drops below 0.7240
- Kiwi losses momentum during the American session as stocks decline.
- DXY remains in positive supported by higher US yields.
The NZD/USD pair failed to hold onto daily gains and turned negative during the American session amid a rally of the US Dollar and deterioration in risk appetite. The pair dropped to 0.7220 and it remains near the low, under pressure as the VIX (fear index) jumps above 20.00.
Higher US yields boosted the US dollar in the market. The 10-year yield climbed to 1.68%, reaching the highest in two weeks, before pulling back modestly. The move in the bond market gained speed after the release of US economic data.
US Economic data came in mixed. The economy grew at an annual rate of 6.4% during the first quarter. Initial jobless claims dropped to 553K in the week ended April 24, slightly above expectation. Pending home sales rose 1.9% in March.
In Wall Street, equity prices open higher boosted by corporate earnings and data, and also following Wednesday’s FOMC statement. Over the last hours, risk sentiment deteriorated. As of writing, the Dow Jones is falling by 0.18% and the Nasdaq by 0.65%.
From a technical perspective, the reversal in NZD/USD looks like a correction. The next support stands at 0.7210 followed b y0.7185/90 (weekly low). A recovery back above the 0.7250 zone should add momentum to the kiwi. The critical resistance continues to be 0.7300.
Technical levels