• NZD/USD lost more than 1% and declined below 0.5940.
• US inflation from September came in a tick higher than expected.
• Higher US bond yields and hawkish bets on the Fed favour the USD.

On Thursday, the NZD/USD saw red and declined towards 0.5935, its lowest level since Friday. As the US Consumer Price Index came in above expectations, markets are now pricing in higher odds of a 25 basis point (bps) hike in the December meeting, which caused the US bond yields to rise.

The United States released data indicating that the U.S.'s Consumer Price Index (CPI) stood at 3.7% YoY, surpassing the market's expected 3.6% and aligning with the previous month's 3.7% YoY figure. Simultaneously, the Core measure recorded a 4.1% YoY rate, matching the expectations.

The reaction was a sharp increase of the US bond yields, in which the 2,5 and 10-year rates rose by more than 1%, indicating that markets are betting on higher chances of the Fed delivering on more hike in 2023. In that sense, according to the World Interest Rate Possibilities (WIRP) tool, the likelihood of a 25 basis point increase by the Federal Reserve (Fed) has notably increased and currently hovers at approximately 50%.

The University of Michigan (UoM) will release Consumer Sentiment and Inflation expectations figures for Friday's session. On the Kiwi’s side, now relevant highlights are seen in the New Zealand’s economic calendar.

NZD/USD Levels to watch 

 According to the daily chart, the technical outlook for the NZD/USD remains neutral to bearish as the bears show signs of recovery. The Relative Strength Index (RSI) points south below its middle point, while the Moving Average Convergence (MACD) prints flat red bars. Additionally, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), indicating that the sellers dominate the broader perspective and the buyers need to increase their efforts.

 Support levels: 0.5915, 0.5900, 0.5880.

 Resistance levels: 0.5955 (20-day SMA), 0.5970, 0.600.

NZD/USD Daily Chart