NZD/USD surges to highest in two weeks, eyes 0.6850
|- Kiwi benefits from risk appetite and lower US yields.
- DXY tumbles despite inflation hitting the highest in decades in the US.
- NZD/USD having the best day in weeks.
The NZD/USD is having the best day in weeks on Wednesday, supported by a broad-based slide in the US dollar. The pair trades at 0.6840, the highest since January 3 as the DXY tumbles 0.47%, to its lowest in more than a month.
US yields down, despite inflation reading
The US CPI reached 7% in December, in line with expectations. It was the highest reading since 1982. Despite the numbers, US yields moved to the downside and together with higher equity prices on Wall Street, pushed the dollar to the downside.
“If CPI inflation is still around 7% heading into the March FOMC meeting, as we expect it to be, it will be hard for the Fed to stand by idly”, warned analysts at Wells Fargo. The next FOMC meeting is on January 24/25.
The DXY is falling for the third time out of the last four trading days, breaking the 95.50 support area. Now it appears to be heading toward 95.00. At the same time, NZD/USD, broke above 0.6800 and is now looking at the December peak at 0.6856.
A daily close above 0.6860 should clear the way to more gains, with the next critical level seen at the 55-day simple moving average at 0.6890. If NZD/USD reverses from current levels, the support emerges at 0.6795 (20-day moving average).
Technical levels
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