NZD/USD holds steady above 0.6100 mark as traders keenly await US Q4 GDP

• NZD/USD trades with a mild positive bias for the third straight day amid a softer USD.
• Reduced bets for an early Fed rate cut help limit the USD downside and cap the major.
• Traders now look to the Advance US Q4 GDP print for some meaningful opportunities.

The NZD/USD pair attracts some buyers for the third straight day on Thursday and for now, seems to have stalled the previous day’s pullback from the vicinity of mid-0.6100s, or over a one-week high. Spot prices manage to hold above the 0.6100 round-figure mark during the Asian session, though the lack of any follow-through buying warrants some caution for bulls ahead of the crucial US macro data.

The first estimate of the fourth-quarter GDP growth figures from the US is due later this Thursday and will be accompanied by the release of Durable Goods Orders and the usual Weekly Initial Jobless Claims data. Against the backdrop of the upbeat US consumer spending and labor market data released last week, any positive surprise will reaffirm the view that the US economy is in good shape and further push back expectations for an early rate cut by the Federal Reserve (Fed). This should boost the US Dollar (USD) and act as a headwind for the NZD/USD pair.

The immediate market reaction, however, is more likely to remain limited as the market focus remains glued to the US Personal Consumption Expenditures (PCE) Price Index on Friday. The crucial inflation data should play a key role in influencing market expectations about the Fed’s future policy decision, which, in turn, will drive the USD demand. In the meantime, the uncertainty over the timing of when the US central bank will start cutting interest rates keep the USD bulls on the defensive below the highest level since December 13 and lends support to the the NZD/USD pair.

Meanwhile, the quarterly CPI report released on Wednesday showed that consumer prices in New Zealand remained well above the Reserve Bank of New Zealand’s (RBNZ) 1% to 3% target. This limits the likelihood of a near-term interest rate cut by the central bank, which is seen as another factor acting as a tailwind for the domestic currency and assisting the NZD/USD pair to hold above a technically significant 200-day Simple Moving Average (SMA).

Technical levels to watch