The NZD/USD price popped to the highest point since July 8th as investors reflected the strong New Zealand consumer inflation data. The pair jumped to a high of 62 cents, which was about 2% above the lowest level last week. However, this price is about 5.93%, below the highest point in June.
New Zealand inflation
The NZD to USD price continued its recovery process as investors reacted to the latest New Zealand inflation data. According to the country’s statistics agency, the headline CPI rose from 6.9% in Q1 to 7.3% in Q2 as the cost of energy and food continued surging. It was the biggest increase since 1990 and was also significantly higher than the median estimate of 7.1%.
Notably, New Zealand’s inflation dropped slightly on a quarter-on-quarter basis. It moved from 1.8% to 1.7%, which was higher than the median estimate of 1.5%. The broader inflation is significantly higher than the RBNZ target of 2.0%.
The strong New Zealand inflation data came a week after the Reserve Bank of New Zealand decided to hike interest rates by 0.50%. This year’s third half-a-point increase brought the Official Cash Rate to about 2.5%. Therefore, with inflation surging, analysts believe that the RBNZ will deliver 0.50% hikes in all the remaining meetings of the year.
In a note, an ANZ analyst told Bloomberg:
While it is our expectation that signs of softening domestic demand will become increasingly evident over the second half of this year, the RBNZ has more work to do.”
NZD/USD forecast
The four-hour chart shows that the NZD to USD pair has been in a strong bullish trend in the past few days. It managed to move above the upper side of the descending channel, which is shown in blue. Also, the pair has moved above the 25-day and 50-day moving averages. It is approaching the important resistance point at 0.6216, which was the lowest point in May of this year.
Therefore, the NZD/USD pair will likely continue rising now that it has moved above the descending channel. If this happens, the next key level to watch will be at 0.6300. This view will be confirmed if it manages to move above the resistance at 0.6216. A move below the support at 0.6160 will invalidate the bullish view. Get an updated NZD to USD signal using InvestingCube’s S&R indicator.
