NZD / USD bounces off 0.6875 and returns to the 0.6900 zone

• The kiwi finds support at 0.6875 to try to regain the 0.6099 level.
• Inflationary pressures fueled the recovery of the US dollar.
• NZD / USD: Crucial support at 0.6860 – SocGen.

The New Zealand dollar It appears to have found support at 0.6875 on its reversal from the 0.6980 area to cut losses during the US session on Wednesday, attempting to return above 0.6900.

USD bounces off safe haven flows

The NZD has accelerated its reversal from week highs near 0.7000 in a risk-off trading session, with investors increasingly concerned about inflationary pressures. Crude oil has risen to new seven-year highs, with WTI trading just below $ 80, which could pose a challenge to the post-COVID-19 recovery.

Today, the Reserve Bank of New Zealand raised interest rates, by 25 basis points, to 0.50%, for the first time in seven years and confirmed its intention to continue eliminating its monetary stimulus scheme. The move was already included in the market price and has no impact on the NZD.

Furthermore, the macroeconomic agenda has shown that the US ADP employment report beat expectations in September with a 568,000 increase in private payrolls. These figures anticipate a brilliant nonfarm payroll report on Friday, which could lead to the Federal Reserve officially announcing the end of QE.

NZD / USD: Just above crucial support at 0.6860 – SocGen

According to Societe Generale’s currency analysis team, the pair is now above a crucial support area to maintain its positive short-term trend: “The kiwi has made a higher low at 0.6860 recently. As long as it does not break out of that spot, the rebound is expected to persist (…) A move past 0.6980, the 38.2% retracement since September may carry the pair towards a multi-month downtrend line near 0.7110, which is also the 200 WAD with the next hurdle at the September high of 0.7180 / 0.7215 “.

Technical levels