During the European session on Wednesday, the NZD/USD currency pair tumbled to its lowest level in almost three weeks. A rise in the US dollar has sent the pair below 0.6300, which is a 0.75% drop for the day.

Last week’s hawkish comments from the Fed and Tuesday’s policy change by the Bank of Japan, which caused a sell-off on the bond market, continue to raise the yields on US Treasury bonds. The benchmark 10-year US government bond yield drops to a new monthly low. It makes more people want to buy dollars and hurts the NZD/USD pair.

Even though the trade deficit went down from $2298 million to $1863 million in November, the New Zealand dollar is still weak. But a global recovery of risk sentiment could make bullish bets on the safe-haven dollar less likely and help the riskier kiwi.

But if the NZD/USD breaks and stays below 0.6300, pessimistic traders may start to sell. It suggests that the recent drop from a six-month high just above the psychological level of 0.6500 reached in December will continue. So, to get the money back will likely be sold.

Conclusion

On the list of US economic events, traders are waiting for the Conference Board’s Consumer Confidence Index. The NZD/USD pair is affected by the greenback, US bond yields, and people’s feelings about taking risks. All eyes will be on the final US GDP print for Q3 and the US Core PCE Price Index on Thursday and Friday.