NZD/USD grinds higher past 0.6400 as US Dollar struggles to cheer hawkish Fedspeak

• NZD/USD clings to mild gains during two-week uptrend.
• Cautious optimism in the market joins sluggish US Treasury yields, USD to favor buyers.
• Hawkish Fedspeak, recession fears probe upside momentum amid light calendar.

NZD/USD remains mildly bid around 0.6415 as the Kiwi bulls cheer the upbeat sentiment amid sluggish hours of early Friday’s trading. In doing so, the quote reverses the previous day’s losses while bracing for the second consecutive weekly gain.

The risk-on mood could be linked to the hopes of more stimulus from China, mainly after the People’s Bank of China’s (PBOC) fifth monthly inaction. On the same line could be the challenges for the Federal Reserve’s (Fed) rate hike trajectory emanating from the downbeat US data.

On Thursday, the US Unemployment Claims dropped to the lowest levels since late April 2022 and the Philadelphia Fed Manufacturing Survey Index also improved However, US Building and Housing Starts joined the previously release downbeat US Retail Sales and Producer Price Index (PPI) to propel fears of a recession in the world’s largest economy, earlier backed by the softer wage growth and activity data from the US.

It should be observed that New Zealand’s Business NZ PMI for December and Visitor Arrivals for November both eased in their latest readings and challenge the Kiwi pair buyers of late.

Alternatively, the US Dollar Index (DXY) picks up bids to 102.15 as it consolidates the previous day’s losses, the biggest in over a week, as Fed policymakers favor higher rates during their last public appearances before the 15-day silence period ahead of the February Federal Open Market Committee (FOMC) meeting. It’s worth noting that the latest tension surrounding Taiwan also seems to probe the NZD/USD bulls.

Amid these plays, the key US Treasury bond yields struggle to extend the previous day’s rebound from the multiday low while the S&P 500 Futures print mild gains. That said, stocks in the Asia-Pacific region trade mixed at the latest.

Moving on, a lack of major data/events, as well as hawkish Fedspeak, could challenge the NZD/USD pair’s upside ahead of the key week comprising multiple activities, inflation and growth numbers for the key economies.

Technical analysis

The 100-bar Exponential Moving Average (EMA) joins the 50-EMA and the weekly support-turned-resistance to challenge the NZD/USD bulls around 0.6415. However, the previous day’s low of 0.6365 restricts the immediate downside of the quote, a break of which will highlight the 61.8% Fibonacci retracement level of the NZD/USD pair’s January 06-18 upside, near 0.6315.