NZD/USD sits near the top end of its weekly range, around mid-0.6200s ahead of US PPI

NZD/USD scales higher for the second straight day and is supported by a combination of factors.
Expectations for additional stimulus from China boosts antipodean currencies, including the Kiwi.
The Fed rate uncertainty keeps the USD bulls on the defensive and acts as a tailwind for the pair.

Haresh Menghani FXStreet

The NZD/USD pair builds on the overnight bounce from the sub-0.6200 levels, or the weekly low, and gains positive traction for the second successive day on Friday. Spot prices stick to modest intraday gains through the first half of the European session and currently trade around the mid-0.6200s, closer to the top end of the weekly range.

The National Bureau of Statistics reported that consumer prices in China remained in deflationary territory for the third straight month in December. Furthermore, the Producer Price Index (PPI), which measures costs for goods at the factory gate, fell for the 15th straight month. This, in turn, fuels speculations about additional government stimulus and provides a modest lift to antipodean currencies, including the New Zealand Dollar (NZD).

Meanwhile, the US Dollar (USD) remains confined in a familiar range held over the past week or so amid the uncertainty over the Federal Reserve's (Fed) interest rate trajectory. This turns out to be another factor lending support to the NZD/USD pair. That said, diminishing odds for a more aggressive policy easing acts as a tailwind for the US Treasury bond yields, which, along with geopolitical risks, limit losses for the safe-haven Greenback.

Apart from this, persistent worries about the worsening economic conditions in China might hold back traders from placing fresh bullish bets around the NZD/USD pair and should cap any meaningful appreciating move. The fears resurfaced after data showed that China's imports grew less than expected in December, which pointed to still weak domestic demand. This offsets upbeat export figures, which indicate that global trade is starting to recover.

The aforementioned mixed fundamental backdrop, along with the NZD/USD pair's recent range-bound price action witnessed over the past week or so, makes it prudent to wait for strong follow-through buying before placing fresh bullish bets. Traders now look to the release of the US Producer Price Index (PPI). This, along with a scheduled speech by Minneapolis Fed President Neel Kashkari, might provide some impetus during the North American session.

Technical levels to watch

NZD/USD

Overview
Today last price	0.625
Today Daily Change	0.0018
Today Daily Change %	0.29
Today daily open	0.6232

Trends
Daily SMA20	0.6269
Daily SMA50	0.6145
Daily SMA100	0.6029
Daily SMA200	0.6092

Levels
Previous Daily High	0.626
Previous Daily Low	0.6196
Previous Weekly High	0.6339
Previous Weekly Low	0.6181
Previous Monthly High	0.641
Previous Monthly Low	0.6084
Daily Fibonacci 38.2%	0.6235
Daily Fibonacci 61.8%	0.622
Daily Pivot Point S1	0.6199
Daily Pivot Point S2	0.6165
Daily Pivot Point S3	0.6134
Daily Pivot Point R1	0.6263
Daily Pivot Point R2	0.6294
Daily Pivot Point R3	0.6327

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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