• NZD/USD steps back after challenging the intraday high.
  • RBNZ left monetary policy, benchmark interest rate unchanged, as widely expected.
  • Market sentiment remains mixed amid a light calendar, vaccine woes, weaker dollar chattered the most.
  • Fed’s Powell, risk catalysts remain in the spotlight.

NZD/USD drops to 0.7050, following its initial jump to 0.7068, following the Reserve Bank of New Zealand’s (RBNZ) rate decision during early Wednesday. In doing so, the kiwi pair reacts to the pullback in the US dollar but a quiet session in Asia restricts the pair’s moves.

RBNZ matches most market consensus while leaving the benchmark interest rates unchanged at 0.25% and large-scale asset purchases program (LSAP) left at NZ$100 billion. The New Zealand central bank also said, “It’ll leave current monetary policy settings in place until its confidence that inflation and jobs targets are achieved.”

Read: RBNZ left rates on hold at 0.25%, NZD unchanged

Earlier in the day, Australia’s Westpac Consumer Confidence for April marked strong figures of 6.2% versus 2.6% previous expansion. Also on the positive side was the news that Queensland will be early in removing the coronavirus (COVID-19)-led activity restrictions. Australia becomes New Zealand’s biggest trading partner and hence any positive for the Oz nation should favor the kiwi.

On the contrary, a halt in the Johnson & Johnson covid vaccine’s usage in all the 50 US states and no more trials, amid blood clotting issues, seem to have tested the market’s optimism. Furthermore, fears of reflation, backed by Tuesday’s strong US inflation figures, also challenge the market sentiment.

However, a lack of major catalysts and a light macro flow keep the markets dull.

Against this backdrop, S&P 500 Futures wobble around record top whereas the US 10-year Treasury yields catch a breather after 5.6 basis points (bps) of declines the previous day. Further, New Zealand’s NZX 50 rise 0.50% to 382.80 by the press time.

Moving on, NZD/USD traders will keep their eyes on the speech from Fed Chair Jerome Powell, around 16:00 GMT, for fresh impulse as the US central banker will be watched for his reaction to the recently strong inflation data.

Technical analysis

A clear upside break of a downward sloping trend line from February 25 and 21-day SMA, respectively around 0.7025 and 0.7050, enables NZD/USD bulls to eye the lows marked during January and early March surrounding the 0.7100 round-figure.