NZD/USD taking a breather after sharp decline ahead of US data on Friday

• NZD/USD stuck in a tight range as investors await key data from the US on Friday. 
• The NZD/USD bear trend is USD-driven, boosted by surging US Treasury yields.

The NZD/USD is trading at around 0.7066 virtually unchanged on Thursday in the last part of the US session. 

The NZD/USD is taking a breather on Thursday from the sharp downfall of the last few days. The move down is lead by a strong US dollar demand which stems from rising 10-year US Treasury yields which are trading at 4-year's high in the 3% region.

In the absence of major news, the NZD is taking its cues from its neighbor, the AUD. The Australian dollar is currently slightly supported as it is correlated to US equities which are having a bull run in Thursday’s trading. Which explains the pause in the NZD/USD bear trend. 

The main feature of the end of the week will be on Friday with the US inflation and Gross Domestic Product (GDP). The Personal Consumption Expenditure index (PCE) is the favorite gauge of inflation by the Fed. The core PCE is expected to accelerate at 2.4% from 1.9% in the previous quarter while the US Gross Domestic Product Annualized for the first quarter of 2018 is expected to decelerate to 2% from the 2.9% seen previously.

Interestingly, the current estimates from the St. Louis Fed's nowcast forecast an above 3% growth in Q1 which is much more than the current consensus. On the other hand, Barclays Bank, see the GDP much more down. Last week, the bank said it sees it at 1.5% in the first quarter of the year. "Incoming data during the quarter has suggested less momentum than previously anticipated," Barclays wrote in a note to clients.

Meanwhile, Monday's Chicago Fed National Activity Index showed a deceleration in economic activity in March, which can provide support for the slow growth in the first quarter for the GDP. However, the three-month average of the index pulled back only slightly, suggesting low risks of recession for March. The monthly reading for March dropped sharply after a strong reading for February.

NZD/USD daily chart 

The trend is bearish and supports are seen at 0.7056 cyclical low and 0.7000 figure while resistances are seen at 0.7096 high of the day and at 0.7153 swing low.