The NZD/USD pair is soaring for the second straight day as the US Dollar continues to take a hit from dwindling bets of more aggressive rate hikes. These have stemmed from Wednesday’s US CPI data that showed a cooling inflation situation.
As the greenback remains on offer this Thursday, risky currencies continue to be the primary beneficiaries of the play. The New Zealand Dollar is one such beneficiary. It soared 116 pips against the greenback on Wednesday and is up 51 pips as of writing.
Further propping the pair this Thursday is data from the US Bureau of Labor Statistics showing an easing of producer inflation. The monthly US Producer Price Index came in at -0.5% in July, far lower than June’s 1.1% increase and the market expectation of a 0.2% increase. In addition, the report’s core component saw PPI increase 0.2% in July, lower than the last consensus numbers of 0.4%.
The data shows cooling inflation at the production end of the supply chain, further staving off recession fears and dwindling bets of aggressive tightening by the Fed. It also puts the NZD/USD pair in good stead for a solid finish to the day’s trading session.
NZD/USD Forecast
The day’s uptick has violated the resistance at 0.64256 (24 May and 7 June lows), but the pair needs to see a 3% penetration close to confirm the breakout. A successful break keeps the 0.64998 price mark in focus as the next resistance of note (26 May and 7 June highs) before 0.65858 enters the mix as an additional barrier to the north.
On the other hand, a correction from present levels sees the 0.63820 support (11 May high) entering the picture as the immediate downside target. Below this level, 0.62768 (20 July and 29 July highs) and 0.62220 (12 May and 22 July lows) form additional downside barriers.
NZD/USD: Daily Chart
