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NZD/USD recovers after soft PCE data from the US

  • NZD/USD cleared part of it previous day’s losses and climbed to 0.6130, 0.90% up on the day.
  • Core PCE came in at 4.6% YoY vs. the 4.7% expected in May.
  • US bond yields retreated, weakening the US Dollar.

On Friday, following the release of soft Personal Consumption Expenditures (PCE) data from the US, the NZD/USD pair staged a recovery, erasing a portion of its previous day's losses. The pair advanced to 0.6120, marking an increase of 0.80% for the day. Following the data, US bond yields retreated, weakening the US Dollar, but remained in positive territory.

US reported soft PCE figures.

On Friday, the US Bureau of Economic Analysis reported that the Core PCE, the Federal Reserve’s (Fed) preferred gauge of inflation in the US, slightly decelerated in May. The figure declined to 4.6% YoY from its previous 4.7% reading, failing to meet the expectations of 4.7% and tallying a 0.3% MoM increase vs the 0.4% expected.

In response US bond yields retreated from daily highs as investors seemed to be betting on a less aggressive Fed. In that sense, the 2-year Bond yield peaked at 4.93%, its highest level since March 9, retreating to 4.85%, while the 5 and 10-year rates fell to 4.13% and 3.83%.

However, more evidence of inflation deceleration must be seen for the Fed to pivot from its hawkish stance. As for now, according to the CME FedWatch tool market is 86% sure of a 25 basis points (bps) hike on July 26 and still trying to figure out when the second hike Jerome Powell hinted will come.

NZD/USD Levels to watch

According to the daily chart, the technical outlook for the NZD/USD got better as the Relative Strength (RSI) and Moving Average Convergence Divergence (MACD) gained traction in negative territory. In addition, traders should eye the convergence of the 200 and 20-day Simple Moving Averages (SMA). Moreover, traders should eye the 200, 100 and 20-day Simple Moving Averages (SMA) convergence towards the 0.6140-0.6200 area as they seem to be about to perform a bearish cross. 

On the downside, support levels to watch align at 0.6100, 0.6050 and at 0.6030 (strong support seen at the beginning of June).

NZD/USD Daily chart

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NZD/USD

Overview
Today last price0.6129
Today Daily Change0.0059
Today Daily Change %0.97
Today daily open0.607
 
Trends
Daily SMA200.6138
Daily SMA500.6167
Daily SMA1000.6197
Daily SMA2000.616
 
Levels
Previous Daily High0.6112
Previous Daily Low0.605
Previous Weekly High0.6237
Previous Weekly Low0.6116
Previous Monthly High0.6385
Previous Monthly Low0.5985
Daily Fibonacci 38.2%0.6074
Daily Fibonacci 61.8%0.6088
Daily Pivot Point S10.6043
Daily Pivot Point S20.6015
Daily Pivot Point S30.5981
Daily Pivot Point R10.6105
Daily Pivot Point R20.6139
Daily Pivot Point R30.6167

Author

Patricio Martín

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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