NZD/USD recovers above 0.7300 on USD sell-off

The NZD/USD is trading around the 0.7330 level after reaching a high of 0.7351 after a sharp rise from 0.7241.
The US inflation report sent the dollar higher but the greenback fell back down.

Yohay Elam FXStreet

The NZD/USD is trading some 60 pips higher on the day at around 0.7330.

The US released stronger than expected inflation numbers. Core CPI rose by 1.8%, above 1.7% that was expected. Headline inflation also came out above projections. The initial reaction was a stronger dollar and a drop in US futures. The NZD/USD dropped sharply to 0.7241.

Later, US stock markets opened with small losses and later recovered. Moreover, the volatility VIX index also dropped and contributed to a better mood. The risk-on environment and the US dollar sell-off were sharp and support the NZD/USD.

Looking ahead, there are no notable events in New Zealand. Shares will continue influencing the pair. Later on, the Philly Fed Manufacturing Index and US jobless claims are lined up on the economic calendar on Thursday at 13:30 GMT.

NZD/USD technical picture

The RSI on the one-hour chart points to further gains while momentum is mixed. Immediate resistance awaits at 0.72451, the swing-high today. Further resistance is at the round level of 0.74 that capped the pair earlier.

On the downside, the low of 0.7241 is notable on the downside. It is followed by the 0.7180 line which worked as support earlier on.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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