NZD / USD found strong support at the 100 DMA, around 0.7035

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  • The NZD / USD extends its losses for the third day in a row.
  • No economic data from New Zealand and the United States keeps the pair trending in the dynamics of demand for the US dollar.
  • Harker of the Philadelphia Fed argued that the Fed can raise rates and at the same time lower them if necessary.

The NZD / USD it is down for the third day in a row, down 0.36%, trading at 0.7034 during the American session at the time of writing. At the beginning of the Asian session, the NZD limited its decline for a couple of hours around the 0.7054-0.7071 range. However, it failed to gain traction amid an empty New Zealand economic calendar before falling towards 0.7000, driven by demand for the US dollar.

On Wednesday, US inflation rose to levels last seen in the 1990s. October’s Consumer Price Index (CPI) rose sharply to 6.2%, higher than the 5.3% forecast. The so-called core CPI, which excludes volatile items such as energy and food, rose to 4.6%, more than the estimated 4%, according to the US Department of Labor.

“The transient inflation argument is coming under increasing scrutiny, and the risk of a policy error on inflation has the potential to destabilize risk appetite,” according to ANZ analysts in a report for clients. . In addition, the bank added that upward revisions to inflation forecasts and the dot plot appear inevitable when the Fed publishes its Summary of Economic Projections (SEP) at the next meeting.

It’s worth noting that the Philadelphia Fed’s Harker argued that the Fed can raise rates and at the same time lower them if necessary, adopting a tool that the Bank of England (BoE) would use when it begins to tighten up economic conditions in the Kingdom. United.

The US dollar index surpasses 95.00 for the first time since July 2020

Meanwhile, the dollar is successfully gaining ground following the US CPI report, extending its lead against most G8 currencies. The US Dollar Index, which tracks the dollar’s performance against a basket of six rivals, is up 0.15%, breaking above 95 for the first time since July 2020, settling at 95.03.

Therefore, for the rest of the week, the NZD / USD price action will be in the hands of the dynamics of the US dollar and market sentiment. On Friday, the New Zealand Economic Agenda will present Business NZ’s PMI for October, with the previous reading at 51.4.

On the American front, the University of Michigan Consumer Sentiment Index for November will be released. Additionally, New York Fed Chairman John Williams will speak at a virtual conference hosted by the New York Fed.

NZD / USD Price Forecast: Technical Outlook

On the daily chart, the NZD / USD accelerated its downward movement, but was limited by the psychological support at 0.7000 and the 100-day moving average (DMA) which is located at 0.7023. However, in the short term it is still sloping to the downside, as the 50 and 200 DMA are above the pair’s price. Furthermore, the Relative Strength Index (RSI) recently broke the midline of 50, settling at 43, pointing lower, adding another bearish signal to the outlook for the New Zealand dollar.

However, to accelerate the downtrend, sellers of the NZD / USD will need a daily close below 0.7000. In that result, the next support would be 0.6950, followed by an ascending trend line that travels from the August lows to the September lows, hovering around 0.6920-30.



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