NZD/USD outperforming to challenge 0.7330 sell-off

Currently, NZD/USD is trading at 0.7234, up 0.54% on the day, having posted a daily high at 0.7249 and low at 0.7174.

NZD/USD has been consolidated after scoring the fresh aforementioned highs earlier as the pair meets the 8th Fd downtrend from 0.7332. The dollar is on the back foot and the FOMC minutes have left a dark shadow over the greenback.

Analysts at Scotiabank explained that, "Concern regarding the USD may be allayed by a WSJ interview with Treasury Sec - Mnuchin today in which he states that a strong USD reflects confidence in the US economy and that appreciation over the longer run is a “good thing” while short-term USD gains can have good and bad effects; this does not sound like a Treasury Secretary that is too worried about the USD at the moment. 

The Secretary was also on TV a short while ago talking up “significant” tax reforms, which should bolster risk appetite in US markets. We remain bullish and feel that very USD-supportive yield spreads suggest the USD can remain strong, and perhaps should be stronger already." 

NZD/USD medium term outlook

Analysts at Westpac suggested that the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down to 0.7000 or lower. "Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar’s trend. (21 Feb)."