NZD/USD eyes 0.6200 as risk-off mood ameliorates ahead of Fed Powell’s testimony

• NZD/USD is on the verge of recapturing the 0.6200 resistance as the risk-off mood has eased.
• The Fed is expected to analyze February’s economic data before endorsing more rates.
• Chinese Trade Balance data is expected to improve amid firmer reopening measures.

The NZD/USD pair is aiming to recapture the round-level resistance of 0.6200 in the early Tokyo session. The Kiwi asset has been strengthened as the risk-off market mood is ameliorating ahead of Federal Reserve (Fed) chair Jerome Powell’s testimony.

S&P500 ended Monday’s session with nominal gains as anxiety among the market participants is accelerating ahead of Fed Powell’s testimony. The US Dollar Index (DXY) is prone to more downside amid a decline in safe-haven’s appeal. The return on the US government bonds will remain in action ahead of the release of the United States Employment data. The 10-year US Treasury yields are looking to recapture 4.0%.

MUFG said “It doesn’t expect Fed Chair Jerome Powell to endorse that scale of further tightening” when the Fed chief takes to Capitol Hill to deliver his semi-annual testimony before Congress.

Analysts further added that Fed Powell is more likely to “wait to assess further data in the coming months to see if the strength in activity and inflation is sustained before strongly committing to more rate hikes.”

On Wednesday, the release of the US Automatic Data Processing (ADP) Employment data will be keenly watched. February’s retail demand remained resilient, therefore, the demand for talent could be on the upside. According to the estimates, the economic data is 195K, higher than the prior release of 105K. Strong demand for labor could propel the fears of more rates from the Fed.

The Kiwi Dollar might display a decent action toward the release of China’s Trade Balance (US) (Feb) data. The economic data is expected to improve to $81.8B from the former release of $78B. Chinese economy looks energized on the track of economic recovery after the reopening of the economy. It is worth noting that New Zealand is one of the leading trading partners of China and trading activity in the Chinese economy will support the New Zealand Dollar.