NZD/USD: taking on the 10-D SMA in better risk environment

  • Risk appetites were a little stronger overnight, NZD/USD up to the 10-D SMA.
  • Bulls look towards the 200-month moving average resistance at 0.7007. 

NZD/USD is currently 0.6776 having made a high of 0.6786 and a low of 0.6748 after a risk on session in the US. Markets found some relief overnight on a lack of trade escalation as investors note China's more conciliatory tone. 

"Perhaps it was the lack of immediate retaliatory response from China, or that US CPI undershot expectations a touch, but risk appetites were a little stronger overnight, helping to lift kiwi off the 0.6750 level. However, it was hardly a convincing bounce, with the NZD still looking a little tenuous here," analysts at ANZ explained. 

Traders sold off the dollar when the US CPI inflation arrived

Traders sold off the dollar when the US CPI inflation came in slightly weaker than market expectations. It was a surprising miss considering the firm PPI print yesterday when the dollar seemingly got a bit too far ahead of itself. The headline CPI was up 0.1% m/m, compared with 0.2% expected, to reach 2.9% y/y. Meanwhile, jobless claims continued to trend sideways at low levels, highlighting labour market strength.

NZD/USD levels

A deeper support comes as 0.6750 and resistance is located at 0.6860 (21-D SMA 0.6836). 0.6781 is where the 10-D SMA is located and where the descending trend line is located. 0.6920 puts the bulls back in control and the June highs will be up for grabs. However, bulls really need to get above the 200-month moving average resistance at 0.7007. 

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