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NZD/USD keeps the area of 3-month high amid broad USD weakness

  • Greenback bears took dovish Fedspeak ahead of the blackout period as a clear indication of the Fed’s high rate cut.
  • Absence of major data, positive sentiment surrounding the largest customer, Australia, helped Kiwi.
  • Trade/political headlines will be in the spotlight following NZ Credit Card Spending data.

With the Fed policymakers’ clear bearish bias dragging the US Dollar (USD) down, the NZD/USD carries previous strength forward as it trades near 3-month high while taking the rounds to 0.6785 at the start of Friday’s Asian session.

The New York Fed President John Williams stole the show before the US Federal Reserve policymakers go for a 2-week’s blackout period ahead of the July 31 monetary policy meeting decision. Mr. Williams provided the strongest hint to the speculations of 50 basis points (bps) Fed rate cut during the upcoming Federal Open Market Committee meet while mentioning that a preventive cut is better than letting ‘disaster unfold’.

Additionally, comments from the Fed Vice Chairman Richard Clarida, as conveyed by the Fox News, were also downbeat enough to support the sentiment in favor of the Kiwi pair.

Elsewhere, optimism surrounding the largest customer Australia also pleased the New Zealand Dollar (NZD) buyers.

On the contrary, the US-China trade tussles turn stalemate as the US weighs what kind of concessions it can give to China’s Huawei in order to push the trade negotiations forward.

Looking ahead, the economic calendar has fewer data/events up for release during the day but New Zealand’s Credit Card Spending for May and the US Michigan Consumer Sentiment Index for July will be observed closely. While NZ Credit Card Spending may soften to 5.4% from 6.6%, the US consumer confidence gauge could strength to 98.5 versus 98.2.

Technical Analysis

With the overbought conditions of 14-day relative strength index (RSI) favors the quote’s pullback to 200-day exponential moving average (EMA) level of 0.6716, 0.6750 may offer an intermediate halt during the dip. Meanwhile, sustained break of 0.6790 enables the pair to target April month high around 0.6840.

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