The NZD/USD pair held on to its modest intraday gains through the early European session and was seen hovering near the top end of its daily trading range, around the 0.7170-75 region. The pair managed to regain positive traction on Thursday and recovered a part of the previous day's US CPI-inspired slump of over 120 pips to one-week lows. The uptick marked the first day of a positive move in the previous three and was supported by a combination of factors. A modest pullback in the US Treasury bond yields held the US dollar bulls from placing aggressive bets. The NZD/USD pair got an additional boost after New Zealand Prime Minister Jacinda Ardern said she is exploring quarantine-free travel with other countries.

It is worth reporting that the headline CPI recorded the fastest rise since September 2008 and accelerated to a 4.2% YoY rate in Aril, significantly above the Fed's 2% target. Adding to this, core CPI (excluding food and energy) increased 3.0% YoY during the reported month. Market participants now look forward to the release of the usual Initial Weekly Jobless Claims and Producer Price Index (PPI) from the US. This, along with the US bond yields and the broader market risk sentiment, will influence the USD and provide some impetus to the NZD/USD pair.