NZD/USD tracks downbeat risk reversal to break three-week-old support

One-month risk reversal (RR) of NZD/USD, a gauge of calls to puts, prints the biggest daily fall since January 28 during early Friday, per data source Reuters.

While the latest daily RR prints -0.076 figures to please the bears, the weekly number is still positive, up for the second consecutive week around +0.049.

The mismatch between the daily and weekly readings could be justified by the Reserve Bank of New Zealand’s (RBNZ) latest survey that portrays hawkish hopes among the business houses. However, the four-decade high US inflation data challenges the NZD/USD bulls as markets place high bets on the 0.50% rate hike concerns for March.

While tracking the immediate options markets signals, coupled with the broad risk-off mood favoring the US dollar, NZD/USD refreshes intraday low near 0.6630 by breaking an upward sloping support line from January 28.

That said, risk-off mood can keep NZD/USD directed towards the yearly low near 0.6530, with 0.6590 acting as immediate support. However, the odds of a 0.25% RBNZ rate hike in February may restrict the kiwi pair’s weakness in the upcoming days.

Read: NZD/USD struggles in the face of a stronger US dollar despite hot RBNZ inflation expectations