NZD/USD extends upbeat NZ CPI-led rally, surges to 0.7200 neighborhood

Haresh Menghani FXStreet

The NZD/USD pair extended upbeat CPI-led bullish momentum and has now moved within striking distance of 0.7200 handle.

Currently trading at a seven day high level around 0.7195 level, the pair's initial leg of up-move, led by a broad based US Dollar, got an additional boost after NZ quarterly CPI surprisingly rose to 0.2% in Q3 as against consensus estimates of a flat reading. Today's inflation data cooled-off speculations of further rate-cut by RBNZ at its November meeting and lifted the pair back above 100-day SMA.

Meanwhile, the greenback on Tuesday remained on back-foot as Monday's disappointing US manufacturing data seems to have dented market expectations over an eventual Fed rate-hike action by the end of this year and is further helping the pair to maintain its bid tone.

Moving ahead, today's US CPI print, due later during NA trading session, and the release of GDT Price Index would provide fresh impetus for the pair's next leg of directional move.

Technical levels to watch

A follow through buying interest above 0.7200 handle is likely to lift the pair immediately towards 0.7220 horizontal resistance above which a fresh bout of short-covering has the potential to continue boosting the pair further towards 0.7300 handle with 0.7265-70 area acting as intermediate resistance.

Meanwhile on the downside, 100-day SMA near 0.7175-70 area now becomes immediate support to defend, which if broken could drag the pair back towards session low support near 0.7135-30 region. A follow through selling pressure below session low support would negate any near-term bullish bias and turn the pair vulnerable to head back towards 0.7100 handle.

Sell 75%

Buy 25%

Avg Sell Price 0.7184

Avg Buy Price 0.7040

Liquidity Distribution

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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