FX.co ★ Blackpink | NZD/USD

New Zealand Dollar (NZD) falls compared with its key currency rivals on Thursday. The antipodean currency is trading 0.25% weaker at 0.5679 versus the US Dollar (USD) in the European session. Weak-than-expected New Zealand (NZ) Q3 Consumer Price Index (CPI) figures have impacted the Kiwi currency. Analysts at Brown Brothers Harriman (BBH) report that NZ Q3 CPI “came in below expectations” as “headline CPI gained 0.7% q/q versus 1.5% in Q2, below the 0.8% increase expected by consensus and RBNZ.” Nevertheless, according to BBH, “above-target inflation and still high oil prices point to further RBNZ rate increases.” As they report, “the swaps curve price in an 85% probability of an RBNZ rate increase to 3.00% on October 28 and more than 100bps tightening over the next twelve months to 3.75% – around the upper end of the RBNZ’s neutral range of 2.20%-4.10%.” Additionally, the strengthening of the US Dollar also adds pressure to the Kiwi currency pairing. Meanwhile, the US Dollar index (DXY), which measures the value of the Greenback versus six major currencies, rallies back towards 101.66 levels from testing the three-week low near 101.45. Looking ahead, the upcoming economic calendar highlights the release of the flash US S&P Global PMI for October. The current price for NZD/USD is 0.5678. NZD/USD has managed to bounce off the 20-day exponential moving average (EMA) at 0.5661. The technical indicator has thus provided a positive bias to the price action. The price now finds itself trading above the EMA level. The RSI (daily) at 51 has moved into the neutral-positive zone from the negative one. This means that the downside pressure might ease and the pair could continue its rally while staying above the 20-day EMA. Support comes in at 0.5661 (20-day EMA). The breach of this trend gauge will be bearish, as it will put NZD/USD under pressure and make it test the previous lows. However, as long as NZD/USD stays above the 20-day EMA, there is no reason to assume that bulls will not protect their positions below this level.