NZD/USD Holds Key Levels After US CPI Inflation

  • NZDUSD
    (${instrument.percentChange}%)

US Consumer Price Index soared in October, with the Core reading rising to 4.6% y/y, compared to 4.0% in September. The pair's original reaction was lower, as conventional wisdom dictates, but it quickly reacted higher.

It narrowly avoided fresh month lows and managed to defend – yet another time – the EMA200 and the 38.2% Fibonacci of the September Low/October high rise. The correction from the last upward move remains shallow and looking at the Daily chart, a Golden Cross (EMA50 cross above EMA200) recently occurred - which tends to be a good precursor of sustained advance.


Past Performance: Past Performance is not an indicator of future results.


Past Performance: Past Performance is not an indicator of future results.

More to it, the NZD is better positioned against the greenback, compared to other major currencies, as the Reserve Bank of New Zealand is far ahead in monetary policy normalization. Last month it hiked rates by 25 bps (to 0.5%) for the first time in seven years, with its next meeting approaching on November 24th. The Fed is further back and about to start tapering its QE.

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These factors can lead to further gains and initially to a return to the mid-0.7100s, before looking towards the downward trendline from the 2021 highs (at around 0.7200).

Despite all that, we don't have as much faith in the aforementioned Golden Cross as we would normally have, since we saw such a cross in September as well, which proved short-lived though. Furthermore, we are still wary of the post-CPI bounce, as this would reasonably help the USD, same way it does with the US10Y Yield.

As such, there is still high risk for fresh month lows (0.7071), which would expose NZD/USD to the 200Day EMA at around 0.7030 and a move below that level would probably quash Kiwi's upward aspirations

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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