- NZD/USD rose above 0.6295, its highest since May 23.
- US CPI declined to 3% YoY vs the 3.1% expected, fuelling a decline in US Treasury yields.
- RBNZ held rates steady, just as expected.
On Wednesday, the NZD/USD gained bullish momentum following soft Consumer Price Index (CPI) inflation figures. As a reaction, the US DXY index fell to lows not seen since 2022 on the back of falling US yields giving room for the Kiwi asset to advance.
US reported soft CPI figures while the RBNZ paused
The US Bureau of Labor Statistics reported that the US Consumer Price Index declined to 3% YoY vs the 3.1% expected from its last figure of 4%, while the Core inflation fell to 4.8% YoY vs the 5% expected from 5.3%.
As a reaction, US Treasury yields displayed sharp declines across the board. The 2-year yield declined 3.20% to 4.72%, the 5-year yield to 4.09%, with a 3.38% fall and the 10-year yield to 3.90%, a 2.00% decline on the day. As lower bond yields tend to weaken the local currency, the USD, measured by the DXY index, retreated to its lowest level since April 2022, to 100.80, seeing a 0.85% loss on the day. Focus now shifts to the Federal Reserve’s (Fed) Beige book to be released later in the session.
The Reserve Bank of New Zealand (RBNZ) kept rates steady at 5.5% for the first time since the tightening cycle began in 2021. The Bank noted that high-interest rates are “constraining spending and inflation as anticipated and required”, noting that they are confident that rates remaining at a restrictive level of inflation will return to their target. However, the Bank didn’t update its macroeconomic forecast, nor did Governor Orr deliver a press conference.
According to World Interest Rate Probabilities (WIRP), markets discount only a 10% probability of the RBNZ hiking in August and 25% and 50% odds of raising rates in October and November, respectively.
NZD/USD Levels to watch
According to the daily chart, the NZD/USD has confirmed a bullish outlook for the short term. Regarding the convergence of the 20, 100 and 200-day Simple Moving Averages at 0.6170-0.6190, the pair managed to consolidate above, and the 20-day SMA is about to perform a bullish cross with the 200-day average which could give further support to the Kiwi.
Support levels: 0.6220, 0.6190 (100-day SMA), 0.6180 (200-day SMA).
Resistance levels: 0.6385 (May’s highs), 0.6420, 0.6450.
NZD/USD Daily chart
-638247755033873986.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds gains above 1.0800 after EU inflation data
EUR/USD is holding gains above 1.0800 in the European session on Tuesday after the mixed Eurozone inflation data. The pair is driven by renewed US Dollar weakness as attention turns toward the US jobs survey and ISM PMI data amid looming Trump's reciprocal tariffs.
GBP/USD turns higher above 1.2900 ahead of US data, tariffs
GBP/USD has regained upside traction above 1.2900 in Tuesday's European trading. A fresh round of US Dollar selling lift the pair ahead of the top-tier US economic data releases and Wednesday's tariffs announcements.
Gold price hits new all-time high ahead of Trump’s reciprocal tariffs
Gold price edges higher again for a second day this week and for the first day of the second quarter of 2025. The precious metal trades slightly above $3,130 at the time of writing and the new all-time high was eked out at $3,149 this Tuesday.
JOLTS job openings set to decline modestly in February
The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the United States Bureau of Labor Statistics. Markets expect job openings to decline to 7.63 million on the last business day of February.
Is the US economy headed for a recession?
Leading economists say a recession is more likely than originally expected. With new tariffs set to be launched on April 2, investors and economists are growing more concerned about an economic slowdown or recession.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.