• NZD/USD erased some of its losses from the previous day to climb to 0.6130, up 0.90% on the day.
  • Core PCE reached 4.6% year-on-year growth vs. 4.7% expected in May.
  • US bond yields retreated, weakening the US dollar.

On Friday, the NZD/USD pair staged a recovery, erasing some of its losses from the previous day, following the release of soft US Personal Consumption Expenditure (PCE) data. The pair advanced to 0.6120, up 0.80% on the day. After the data, US bond yields retreated and weakened the US dollar, but remained in positive territory.

US reported soft PCE numbers.

This was reported by the US Economic Bureau on Friday Analysis announced that Core PC, the Federal Reserve’s (Fed) preferred measure of US inflation, slowed slightly in May. The figure fell to 4.6% year-on-year from 4.7% previously, missing expectations of 4.7% and corresponding to a month-on-month increase of 0.3% versus expectations of 0.4%.

In response, US bond yields retreated from daily highs as investors appeared to bet on a less hawkish Fed. Along those lines, the 2-year bond yield peaked at 4.93%, the highest level since March 9, and retreated to 4.85%, while the 5-year and 10-year yields fell to 4.13% and 3.83%, respectively.

However, further evidence of a slowdown in inflation needs to be seen for the Fed to reverse its hawkish stance. As of right now, CME’s FedWatch tools market is 86% certain of a 25 basis point (bps) hike on July 26 and is still trying to figure out when the second hike will happen Jerome Powell indicated will come.

NZD/USD levels to watch

According to the daily chart, the technical outlook is for NZD/USD improved as the relative strength (RSI) and moving average divergence (MACD) gained traction in negative territory. Additionally, traders should watch for the convergence of the 200 and 20-day simple moving averages (SMA). Additionally, traders should watch the convergence of the 200, 100 and 20-day simple moving averages (SMA) towards the 0.6140-0.6200 area as it looks set to execute a bearish cross.

On the downside, support levels to watch aligned at 0.6100, 0.6050 and 0.6030 (strong early June support).

NZD/USD Daily Chart


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