NZD/USD sticks to gains near 0.6870-75, highest since November 25 ahead of US data

• NZD/USD gained traction for the third straight day and shot to the highest level since late November.
• The USD extended the post-US CPI downfall and was seen as a key factor that provided a goodish lift.
• A positive risk tone further undermined the safe-haven USD and benefitted the perceived riskier kiwi.

The NZD/USD pair maintained its bid tone through the early North American session and was last seen trading near the 0.6870-75 region, or the highest level since November 25.

The pair added to this week's strong move up and gained strong follow-through traction for the third successive day on Thursday amid sustained selling bias surrounding the US dollar. The momentum took along some short-term trading stops placed near the 0.6850-55 region, which prompted some technical buying and provided an additional boost to the NZD/USD pair.

Data released on Wednesday showed that the headline US CPI surged to the highest level since June 1982 and core CPI registered the biggest advance since 1991. The stronger prints reinforced the need for quicker interest rate hikes, though were not deemed worrying enough to change the Fed's already hawkish outlook and continued weighing on the greenback.

Apart from this, a generally positive tone around the equity markets was seen as another factor that undermined the greenback's relative safe-haven status and benefitted the perceived riskier kiwi. With the latest leg up, the NZD/USD pair now seems to have confirmed a bullish breakout and seems poised to build on its recovery from 2021 low, around the 0.6700 mark.

Market participants now look forward to the US economic docket, featuring the release of the Producer Price Index and Weekly Initial Jobless Claims. This, along with Fed Governor Lael Brainard's testimony on her nomination as Vice Chair and the broader market risk sentiment, will influence the USD and provide a fresh impetus to the NZD/USD pair.

Technical levels to watch