- NZD/USD bulls are around 0.6290, with eyes set on a test of 0.6300 and beyond.
- US core PPI was unchanged at 3.4%, showing stronger than expected inflation.
- The US job market has cooled in consecutive weeks, with Unemployment Claims rising above consensus.
The pair NZD/USD hits a new five-day high after forming a bullish engulfing candlestick pattern that exacerbated a jump of more than 80 points on Thursday. The downward trend in inflation in the United States (US), along with a cooling job market, are the main reasons for today’s weak US dollar (USD). The NZD/USD pair is trading around 0.6290 after hitting a low of 0.6203.
NZD/USD is supported by disappointing US economic data.
US stocks with an upbeat sentiment. The arguments in favor of a Fed pivot gather strength as producer inflation eased and jobless claims for the week of April 8 topped estimates. The Producer Price Index (PPI) for March was -0.5%m/m, below forecasts for 0%, while core PPI fell 0.1%m/m, below estimates for a 0.3% expansion. In annual terms, the PPI was 2.7%, below estimates, and the core PPI was 3.4%, as expected by the consensus.
At the same time, the US Department of Labor (DoL) revealed that initial jobless claims last week rose to 239,000, above forecasts of 232,000. Continuing claims fell to 1.81 billion, above forecasts. Ongoing claims fell to 1.81 million in the week to April 8.
The NZD/USD pair jumped from 0.6240 to its daily high of 0.6299, about to hit 0.6300 on US dollar weakness. The dollar hit lows around 100.846, as the Dollar Index shows, before recovering 101.022, with a loss of 0.50%.
US Treasury yields continued their downward trajectory, with the 2-year yield in particular shedding two basis points at 3.945% as traders estimate one more Fed rate hike US Federal (Fed) before pausing. The CME’s Fed WatchTool shows that the odds of a 25 basis point hike by the Fed stand at 66.5%, down from 70.4% on April 12.
NZD/USD Technical Analysis
After breaking above the 200 day EMA at 0.6266, the NZD/USD pair is poised to break above 0.6300. Once broken, the NZD/USD could rally towards the April 6 high at 0.6324, followed by the previous day’s cycle high at 0.6379. A break of the latter would expose 0.6400. Conversely, on a daily close below 0.6300, buyers would risk missing the support at the 200 day EMA. If it breaks below 0.6266, the pair could fall towards the confluence of the 100 and 50 day EMAs around 0.6240-48.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
