NZD/USD breaks two-week downtrend, trades around 0.7040 level

• NZD/USD awaits Fedspeak to draw impetus, RBNZ will be key.
• The kiwi investors keep Thursday's gain amid a softer US dollar.
• Cautious market mood likely limits the upside in the spot. 

NZD/USD breaks its two-week-long downtrend on Friday’s Asian session, as it hovers around 0.7040. At the time of writing, the kiwi is trading at 0.7044, up 0.12%. 

The pair is trading on the front foot, led by the rising expectations of a rate hike in the upcoming monetary policy meeting from the Reserve Bank of New Zealand (RBNZ). On Thursday, the RBNZ announced that the country’s inflation expectations had jumped 3.7%, the highest since 2021.

Experts believe that the coming week is likely to bring some good news for the investors in the form of another rate hike, targeting to limit the country’s inflation between 1-3%, with a central target of 2%.

On the other side, the mighty US dollar took a breather with a two-day loss, staying around 95.60 on Friday. The talk over US stimulus and fresh inflation outlook buoyed the DXY buyers.

Meanwhile, the Fed members continued to pivot to a more hawkish view of inflation. As per Australia and New Zealand Banking Group (ANZ), “NY Fed President and FOMC Vice-Chair John Williams that underlying inflation is broadening and picking up add weight to our assessment that the Fed is pivoting towards a more hawkish assessment of inflation.”

China Evergrande news remains a concern for the kiwi, which has impacted the Chinese market. Also, the upbeat US weekly job numbers and monthly regional manufacturing data contributed to the pair's price action.

After ignoring New Zealand Credit Card Spending for October, YoY, NZD/USD looks forward to the US docket in the absence of major economic activity. The kiwi will look for a catalyst from China and Fed Vice Chairman Richard Clarida's and Christopher Waller's speeches, with a distinct focus on RBNZ.

NZD/USD technical levels