NZD/USD pulls back from weekly highs amid mixed US inflation data, dovish Fed remarks

• NZD/USD recoils to 0.6021 after reaching a weekly peak, influenced by a strengthening USD.
• US PPI data exceeds expectations, introducing a complex layer to the ongoing inflation dialogue.
• Contrasting stances among Fed officials and RBNZ’s rate would keep NZD/USD traders uncertain.

NZD/USD retreats after hitting a weekly high of 0.6055 due to a mixed market impulse witnessed in the North American session that bolstered appetite for the Greenback (USD). Speculations of the US Federal Reserve (Fed) forgetting a rate hike, as dovish comments and neutral postures amongst officials emerged. The pair exchanges hands at around 0.6021.

Kiwi Dollar tempers gain as USD was bolstered by US PPI data

US economic data revealed by the Department of Labor (DoL) showed that September’s inflation in the producer side was higher than expected and, in some cases, above August’s figures. The Producer Price Index (PPI) rose by 2.2% YoY, exceeding August and forecasts of 1.6%, while the core PPI rose by 2.7%, above projections and the previous month.

Recently, Federal Reserve officials have adopted a neutral stance; of late, Fed Governor Christopher Waller said the US central bank can watch and see developments on rates, adding that financial markets tightening “would do some of the work for us.” Earlier, Fed Governor Michelle Bowman said that she favors another rate hike as inflation remains above the Fed’s 2% target.

Given the backdrop, money market futures do not expect another rate hike by the Fed, as shown by the CME FedWatch Tool.

On the New Zealand (NZ) front, the Reserve Bank of New Zealand's (RBNZ) decision to keep rates unchanged at 5.5% could undermine its appeal. The RBNZ said that rates need to be maintained at a restrictive level.

NZD/USD Price Analysis: Technical outlook

The NZD/USD daily chart portrays the pair as neutral to downward biased after testing the latest cycle high of 0.6048, which was briefly pierced and could pave the way to test 0.6100. if the pair decisively breaks the latter, that could pave the way to test the 200-day moving average (DMA). Despite challenging 0.6048, price action in the last couple of days is forming a bearish harami candlestick chart pattern, which, if confirmed, could open the door for the BZD/USD to dive below 0.6000.