- Dollar jumps after Powell’s comments, reaching fresh YTD highs.
- NZD/USD tumbles more than 80 pips from the top to the lowest since November 2020.
The NZD/USD peaked at 0.6855, the highest level since Thursday and then collapsed amid a rally of the US dollar across the board. It bottomed so far at 0.6771, the lowest since November of last year. It remains near the lows, amid rising volatility.
It all changed in one minute
The US dollar was under pressure across the board amid lower US yields. Comments from Fed Chair Powell changed it all. The dollar jumped and is testing recent cycle highs versus it main rivals. It erased in a few minutes recent losses.
The NZD/USD tumbled and is testing the 0.6770 zone. A break lower should clear the way to more losses. The change in the direction of the dollar was abrupt and took place after Powell mentioned it is time to remove the word “transitory” from inflation. His comments boosted US yields from monthly lows and sent equity prices lower.
The combination of risk aversion and a rebound in yields favor the dollar. If the situation does not change, the rally of the dollar could continue. On the contrary, a recovery of NZD/USD back above 0.6800 could suggest a potential interim bottom.
Technical levels
This article was originally published by Fxstreet.com.Read the original article here.
