The NZD/USD pair stays under some selling pressure for the second straight day on Thursday and retreats further from its highest level since September 19, touched earlier this week. The pair loses ground through the first half of the European session and drops to a fresh daily low, below mid-0.5800s in the last hour.
The US Dollar gains strong follow-through traction and develops on the previous day’s solid bounce from a multi-week low, which, in turn, is seen as a key factor dragging the NZD/USD pair lower.
The stronger USD move up could be attributed to some repositioning trade in anticipation of stronger US consumer inflation figures. In addition, a modest pullback in the US Treasury bond yields might keep a lid on any further gains for the greenback.
Apart from this, a generally positive tone around the equity markets could act as a headwind for the safe-haven buck and offer some support to the risk-sensitive Kiwi.
Traders might also refrain from placing aggressive bets and prefer to move ahead of the crucial US CPI report to the sidelines. The data will influence the Fed’s rate-hiking cycle, which, in turn, will drive the USD demand and provide a fresh impetus to the NZD/USD pair.
The headline US CPI is anticipated to fall to the 8% YoY rate in October from last month’s reading of 8.2%. An upside surprise will awaken bets for faster interest rate hikes by the Fed and boost the US currency.
This sets the stage for a further near-term depreciating move for the NZD/USD pair. Even from a technical perspective, this week’s rejection near the 0.6000 psychological mark favors bearish traders and adds credence to the near-term negative outlook.

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