NZD / USD bullish attempts remain capped below 0.6970 / 80

• The Kiwi rebound from 0.6910 stalls below the 0.6970 / 80 resistance area.
• The dollar loses ground with the flattening of the US yield curve.
• The FOMC Minutes confirm the gradual reduction of QE before the end of the year.

The NZD It has recovered from session lows at 0.6910 on Wednesday to erase Tuesday’s losses, helped by a somewhat weaker US dollar. However, the pair has stalled below the top of last week’s trading range at 0.6970 / 80.

USD declines as US yield curve flattens

The kiwi was helped by a moderate weakness in the US dollar on Wednesday with the flattened US yield curve weighing on the US dollar. The yield on the 10-year US Treasury fell to 1.54% on Wednesday from 5-month highs at 1.61% on Tuesday, while the 2-year yield rose to 18-month highs.

The economic calendar has not been able to offer support to the dollar. Minutes from the Federal Reserve’s September meeting have endorsed the idea that QE phasing out could be officially announced next month, indicating that “a phasing out process to conclude in the middle of next year would probably be appropriate.”

Beyond that, some participants have acknowledged that inflationary pressures could linger for a longer period than expected and have suggested the possibility of starting to raise interest rates late next year.

Earlier, the US CPI confirmed market expectations that high inflation continues to loom over the post-pandemic recovery, calling into question Fed Powell’s “temporary” inflation theory. Consumer prices accelerated to a monthly rate of 0.4% in September, from 0.3% in August, and annual inflation increased to 5.4% from 5.3% the previous month.

Technical levels