NZD/USD marches towards 0.6840 as DXY extends downside

• NZD/USD is advancing towards 0.6840, kiwi bulls are capitalizing on the weak DXY.
• The RBNZ has elevated its OCR to 1.5%, which may corner the soaring inflation.
• The DXY ended its nine-day losing streak on a rebound in risk-on impulse.

The NZD/USD pair has displayed a vertical upside move after printing monthly lows at 0.6754 on Wednesday. The Kiwi dollar has been underpinned against the greenback amid positive market sentiment. The risk-on impulse is improving the demand for risk-sensitive currencies, which have been capitalized by the kiwi bulls.

Earlier, the asset remained highly uncertain after the Reserve Bank of New Zealand (RBNZ) elevated the Official Cash Rate (OCR) by 50 basis points (bps) on Wednesday. RBNZ Governor Adrian Orr featured a jumbo interest rate hike to reduce the risks from soaring inflation. Formally, the RBNZ’s OCR has been increased to 1.5% now.

Meanwhile, the outperformance of the Business NZ Purchase Managers Index (PMI) has supported the kiwi. Business NZ has reported the PMI at 53.8, slightly higher than the market consensus of 53.7 and the previous print of 53.6.

The US dollar index (DXY) is auctioning below the psychological support of 100.00 after the uncertainty of the higher US inflation faded away. The 12-month US Consumer Price Index (CPI) landed at 8.5%, a multi-year high figure, which is sufficient to force the Federal Reserve (Fed) policymakers to raise the interest rates by 50 bps in May. The next trigger that will guide the market participants is the US Retail Sales, which are due on Thursday.