• Kiwi is among the weakest G10 currencies despite the RBNZ rate hike.
• The US dollar remains strong, supported by US inflation data.
• NZD/USD heads for the lowest close in a month.

The NZD/USD trimmed losses during the American session; however, it still heads toward the lowest daily close in a month. The pair bottomed at 0.6750 before rising toward 0.6780 amid a correction of the greenback across the board.

The kiwi is among the worst performers even after the Reserve Bank of New Zealand (RBNZ) announced early on Wednesday a 50bps rate hike, surpassing expectations to 1.50%. “The RBNZ is clearly looking to get ahead of the inflation curve and the more aggressive action was justified on the 'least regrets' approach to policy decisions”, explained analysts at TD Securities. They forecast a 50bps May hike, and 25bps hikes at each RBNZ meeting this year in July, August, October and November.

The US dollar peaked on Wednesday after the release of the March Producer Price Index that, rose to 11.2%, from 10.3%, above the 10.6% of market consensus. Despite the number, US yields turned to the downside during the American session and weighted don the US dollar. The DXY is falling 0.12% for the first time in nine days.

Despite the recovery, NZD/USD remains under 0.6800, at the 55-day Simple Moving Average (0.6780) with a negative perspective. The bias should change if the pair rises above 0.6910/15 (20 and 200-day SMA).

Technical levels