NZD/USD consolidates under 0.6650, well within recent ranges as FX markets await US CPI data

• NZD/USD is consolidating under 0.6650 and well within recent intra-day ranges ahead of key US CPI data.
• A firmer-than-expected reading might trigger a further build-up of hawkish Fed bets, analysts have warned.
• In this case, NZD/USD bears would be eyeing tests of support at 0.6590 and 0.6530.

NZD/USD has continued its pattern of stabilisation within recent ranges on Tuesday, trading for the most part just under 0.6650 and well within last Friday’s 0.6670-0.6590ish ranges. Broader macro risk appetite has been fairly directionless since last Friday, making for subdued FX market trade, with the focus firmly on incoming US Consumer Price Inflation (CPI) figures on Thursday. A firmer-than-expected reading might trigger a further build-up of hawkish Fed bets, analysts have warned, which could weigh on crosses like NZD/USD.

Support in the form of last Friday’s post-strong US job report lows just under 0.6600 and last month’s multi-month lows in the 0.6530s are the most obvious levels of support being watched by the bears. In the scenario of a hot US CPI report, these may well be tested, but ahead of then, trading conditions are likely to remain subdued/rangebound. The kiwi is unlikely to get much domestic impetus, though Wednesday's quarterly inflation expectations release is worth watching in the context of an RBNZ that is expected to continue hiking rates aggressively this year.

To the upside, notable levels of resistance in the 0.6680s and then at 0.6700 are worth keeping an eye on. Even if Wednesday’s inflation data does boost hawkish RBNZ bets, it remains far to soon to say that NZD/USD has snapped its negative run over the past few months. While the pair is up more than 1.5% from the late January lows on US dollar profit-taking, it continues to trade about 8% below its Q4 2021 highs.