NZD/USD Holds Key Levels After US CPI Inflation
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.
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 Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.