The USD firmed in the wake of stronger than expected CPI data, sending the kiwi lower. Economists at ANZ doubt the New Zealand dollar can take advantage of RBNZ rate hikes due to high mortgage rates and expected hikes from the Federal Reserve. The NZD was the second best performer (behind the AUD), but they are both still weaker, with stronger than expected US CPI data casting doubt on the idea that the Fed can remain patient.The NZD’s resilience is pretty understandable given that markets have already come to grips with high NZ CPI and hefty rate hikes are already priced in. The NZD has the potential to respond very positively to the next couple of RBNZ OCR hikes (especially if one of them is 50bps), but as we head into 2022, with mortgage rates already well higher and the Fed then likely eyeing hikes, that timing mismatch could be a real challenge for the NZD. So maybe this isn’t as good as it gets, but it may not be too far off it. Let’s see.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The US inflation data-led downside also gains support from the sustained trading below 50-day EMA and the bearish MACD signals.

Hence, the 200-day EMA level of 0.7035 remains on the table while the 0.7000 threshold may challenge the NZD/USD bears afterward. It’s worth noting that the early October peak close to 0.6985 adds to the downside filters. On the flip side, buyers need a daily closing past 50-day EMA level of 0.7075 to aim for the 61.8% Fibonacci retracement (Fibo.) level of 0.7120.

It’s worth noting that the NZD/USD upside beyond 0.7120 will be challenged by the tops marked in September and October, respectively near 0.7170 and 0.7220.

Overall, NZD/USD remains on the bearish consolidation mode before visiting multiple supports around 0.6930.

NZDUSD broke below the trend line

Nov 11 2021