NZD/USD bulls take a breather in pursuit of 0.67 the figure for days ahead

• NZD/USD stalls in the daily correction despite further weakness in the greenback.
• NZD/USD bulls still might not be throwing in the towel just yet. 

NZD/USD stalled midweek as the correction met a prior low on the daily time frame. At 0.6635, the price is flat at the end of the North America session and is set to leave a Doji candle on the daily time frame.  

 As analysts at ANZ Bank said, ''the Kiwi had a whippy sort of a night, rallying up to around 0.6660 before coming back early this morning as the USD DXY put in a very mild recovery off lows and the AUD lost momentum following Lowe’s still measured tone in his speech yesterday.''

Recalling the Reserve Bank of Australia event earlier in the week, the Aussie dragged the kiwi along for a ride to the upside, despite the dovish tone set at the central bank. The markets appear to be setting aside the interest rate differentials for the time being and are enjoying a burst of life in risk appetite that has returned this week. The dollar bloc currencies have benefitted from ongoing weakness in the greenback as a consequence. 

''While price action has been a bit whippy (which isn’t unusual), dips have tended to be shallow and it has been well supported on pull-backs,'' the analysts at ANZ bank argued.

''The data backdrop remains very strong, but at the moment, markets are thinking more about commodity prices and the post-Omicron outlook, and so in that regard, higher oil prices, which have spilt over (no pun intended) onto higher milk prices, and today’s NZ government border announcements bear watching.''

US jobs market in vouge

Meanwhile, the US dollar was once again on the back foot owing to a bearish prelude to this week's main event in US Nonfarm Payrolls on Friday.  The dollar declined to a more than a one-week low on Wednesday after data showed a drop in US private sector employment in January due to the increase in COVID-19 infections. ADP private payrolls, which showed a 301,000 drop, was missing an estimate of 207k.

Also, the January decline followed a downwardly revised 776,000 increase in December, compared with the 807,000 gain initially reported. By sector, goods-producing jobs fell by 27,000, while service-providing jobs plunged by 274,000, with leisure and hospitality jobs down 154,000.

The chorus of less hawkish Fedspeak this week coupled with disappointing data has led to a decrease in pricing of Fed rate hikes in the futures markets. In late afternoon trading, US rate futures priced in about 4.7 hikes this year, or 118.6 basis points of policy tightening, down from the five rate increases seen over the last two days, Reuters reported. ''Futures also showed the probability of a 50-basis-point hike in March has settled at 12.5%, from as high as 32% late last week.''

NZD/USD technical analysis

The weekly outlook is bullish as per the M-formation neckline target. 

The daily chart's deceleration could lead to a test of prior daily highs near 0.66 the figure first before the price finds more demand from there. This could lead to a continuation of the correction into a 61.8% ratio target near 0.67 the figure.