NZD/USD prints three-day uptrend near 0.6150 ahead of US inflation

• NZD/USD grinds higher around a two-week top, recently sidelined.
• New Zealand’s REINZ House Price Index, Food Price Index flashed upbeat data for August.
• Risk-on mood fades amid pre-data anxiety, mixed concerns over China.
• US CPI will be crucial amid hawkish Fedspeak, downbeat inflation expectations.

NZD/USD bulls keep reins near the mid-0.6100s, despite the latest sideways grind, as traders await the key US inflation data on Tuesday. It’s worth noting that the recently firmer sentiment and upbeat data from New Zealand join softer US inflation expectations to weigh on the NZD/USD prices.

New Zealand’s REINZ House Price Index improved to -1.3% MoM in August versus -1.4% prior whereas the Food Price Index rose past 0.6% market forecasts to 1.1% during the stated month, compared to 2.1% previous readings.

Elsewhere, US Consumers saw inflation at 5.75% over the next 12 months in August, down from July’s 6.2%, as well as the lowest since October 2021, as per the New York Fed's monthly consumer expectations survey details released on Monday.  Further data shared by Reuters suggest that the three-year inflation expectations marked the slowest pace since late 2020 while averaging 2.8% versus 3.2% reported in July.

On Monday, updates that Ukraine is gaining success in pushing back the Russian military from some of its areas seem to have underpinned the market’s cautious optimism, even as the same raised the fears of Russia’s harsh retaliation, which in turn favored NZD/USD bulls. On the same line could be the hopes of more stimulus from major economies like China, the US, the UK and Europe. Furthermore, the latest news from the Wall Street Journal (WSJ) suggesting that the US gas prices are down for the 13^th consecutive week also eased the market’s pressure and favored the risk-on mood, as well as the gold price.

Alternatively, the latest headlines from the Financial Times (FT) suggesting mixed views over US President Joe Biden’s chip plan that challenges China to seem to test the NZD/USD buyers. Also, Chinese President Xi Jinping’s aim to reassert Beijing’s influence during the first foreign trip after covid-led lockdowns seems to underpin the cautious mood as the same could give rise to the US-China tension.

Against this backdrop, the risk-on mood weighed on the US Dollar Index, as portrayed by the firmer Wall Street close, which in turn ignored the upbeat US Treasury yields. It should be noted that the US Treasury yields pare recent gains and the S&P 500 Futures print mild gains by the press time.

Moving on, China’s return after the extended weekend will be interesting to watch for the NZD/USD traders. However, major attention will be given to the US CPI for August. The forecasts suggest the headline number ease to -0.1% MoM versus 0.0% prior while the CPI ex Food & Energy is likely to remain unchanged at 0.3% MoM. If the inflation numbers arrive softer, the NZD/USD pair may have a further upside to track.

Also read: US CPI Preview: Dollar set to climb on low core expectations, three scenarios

Technical analysis

The 21-DMA joins the August 22 swing low to highlight the 0.6155-60 as an immediate key hurdle for the NZD/USD bulls to tackle to keep reins. Meanwhile, the previous resistance line from August 18, close to 0.6080, restricts the short-term downside of the Kiwi pair.