NZD / USD breaks 200-day SMA and dips below 0.7080 amid high US inflation

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  • The NZD / USD falls sharply, while US inflation figures reached the highest level since 1990.
  • A pessimistic market sentiment is driving safe haven currencies such as the USD and weighing on the NZD of higher perceived risk.
  • A daily close below the 200-day SMA opens the doors to 0.7000 and beyond.

The NZD / USD extends its losses for the second day in a row and falls 0.70%, around 0.7080, during the American session on Wednesday. Market sentiment is pessimistic, shown by falling US stock indices that mark losses between 0.11% and 0.18% on the day, while US inflation figures rose above 6%, the highest reading since 1990. .

Since the Asian session, the New Zealand dollar lost traction against the US dollar amid expectations that higher US inflation could spur a faster reaction from the Federal Reserve. Money markets raised the odds of a 25 basis point Fed rate hike by June 2022.

Inflation in the US registers the most significant jump in 30 years

On the American economic calendar, the consumer price index CPI for October increased 6.2%, in annual terms, above the figure of 5.4% in September and analysts’ expectations of 5.3%. The core CPI, which excludes food and energy products, increased 4.6% in the same period, also above the 4.3% forecast by the market. The prices of energy, housing, food and vehicles drove the rebound in the CPI.

In the meantime, U.S. bond yields rise, with the benchmark 10-year bond advancing seven basis points, to 1.524%, while the US dollar tracks the yields and is up 0.62% on the day, as measured by the DXY index currently at 94.59.

NZD/USD technical perspective

The NZD / USD moved lower since the Asian session began, retreating from the daily high at 0.7130 to 0.7100 and breaking below the 200-day moving average, generally seen as a bearish sign. A daily close below the 200 SMA could open the door to further losses. The first support area would be the 50 SMA at 0.7063, followed by the SMA 100 in 0.7023.

On the other hand, if buyers of NZD / USD regain the level of 0.7100, it would open the door to a new test of the resistance level of 0.7130, followed by the November 4 high in 0.7178.

NZD / USD technical levels

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