NZD/USD bulls seek a break above 0.6250

• NZD/USD bears need to get below the consolidation and 0.6200.
• NZD/USD bulls eye a move above 0.6250 for a short squeeze. 

NZD/USD is up 0.20% following a move from a low of 0.6202 to a high of 0.6251 wedged between a sideways channel. The bulls need to get above and hold above the 0.6250s and the bears below 0.6200. 

Analysts at ANZ Bank explained that having ''succumbed to a gradual firming in the USD DXY in the wake of another round of stronger than expected US data.''

The analysts noted that a ''tight labour markets and sticky inflation remain the key themes. Of course NZ is in that situation too, and alongside the USD, is on track to continue to top global league tables on the bond yield front. That, alongside an expected boost in economic activity post the cyclone has potential to offset what many fear is a fresh wave of USD strength,'' the analysts at ANZ Bank explained. ''But right here, right now, all eyes are on the 0.6200 level amid sluggish price action.''

Indeed, the greenback is firmer on the prospect of further monetary policy tightening after the Minutes of the Jan. 31-Feb. 1 Federal Open Market Committee meeting released Wednesday showed only "a few" participants wanted a larger 50 basis point increase at the meeting.

Looking ahead, Friday's PCE deflator a key red news event. Ahead of the event, the federal funds target rate band stands at 4.50% to 4.75% ''The market is expecting the January headline data to remain at 5.0% YoY, in line with the previous month,'' analysts at Rabobank said. 

''This would strengthen concerns that the downtrend in inflationary indicators may have stalled. Data in line with market expectations would thus add further weight to the view that the Fed will have to work harder to push inflation back to its target level. Currently implied market rates are pointing to a peak in Fed funds close to 5.33%.''

NZD/USD technical analysis

The bulls are lurking as the price moves to the backside of the down channel and a break of the 0.650s opens the risk of a move into the shorts that have gathered since breaking below 0.6370. a move below  0.6200 opens the risk of a downward continuation with 0.6150 eyed as a key support base.