- NZD/USD has rebounded from session lows in the 0.6420 area as risk appetite has improved since the US open.
- The pair, now trading closer to 0.6475, is likely to trade between the 21-50 DMA ahead of the US CPI release.
The NZD it failed to emulate its Australian counterpart’s rise on the back of a larger-than-expected rate hike from the RBA and instead was one of the worst performers of the day in the G10.
The bearish tone of trade before the US open initially weighed more heavily on the G10 currencies with the tightest liquidity conditions (such as the Kiwi). However, an improvement in sentiment that has seen US equities almost recover to flat has helped NZD/USD back off the lows. The pair is now trading near 0.6475, where it is, however, trading down around 0.2% on the day.
Buying ahead of the 21 day moving average at 0.6420 also appeared to support the kiwi on Tuesday. Subject to risk appetite conditions, the pair is likely to remain trapped between its 21-day moving average and its 50-day moving average (around 0.6580) in the run-up to the release of the US inflation data. US consumer prices on Friday.
Analysts suspect that if data shows that US price pressures have eased more than expected in May, the dollar will likely weaken significantly and risk assets (such as kiwi) will rally. In this scenario, NZD/USD could rise above 0.6550 and avoid a break towards 0.6650 (and its highest levels since April).
Technical levels
Source: Fx Street
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