New Zealand Dollar clings to gains near 0.5620 vs USD after China's inflation data

• NZD/USD attracts buyers for the second straight day, though it lacks strong follow-through.
• The recent pullback in US bond yields keeps USD bulls on the defensive, supporting the pair.
• China’s mixed inflation data fails to influence the pair as focus remains on the US CPI report.

The NZD/USD pair gains some positive traction for the second day on Wednesday, building on the overnight bounce from the 0.5580 support zone, or the lowest level since April 2025. Spot prices touch a fresh weekly top, around the 0.5620-0.5625 region, during the Asian session amid subdued US Dollar (USD) demand and move little following the release of China inflation data.

China's National Bureau of Statistics reported that the headline Consumer Price Index (CPI) rose 0.9% in September from a year earlier, up from 0.8% in the previous month but lower than consensus estimates for a reading of 1.0%. However, China’s Producer Price Index (PPI) jumped 5.0% YoY during the reported month, surpassing market expectations for an increase to 4.5% from 3.8% in August. The data, however, does little to provide any meaningful impetus to the NZD/USD pair as the focus remains glued to the US consumer inflation figures, due later today.

Moreover, the US PPI is due for release on Thursday, which will be followed by Federal Reserve (Fed) Chair Kevin Warsh's speech at the annual meetings of the IMF and World Bank in Bangkok on Friday. Investors will look for more cues about the Fed's future policy path, which will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the NZD/USD pair. Heading into the key data/event risks, the recent pullback in US bond yields keeps the USD on the defensive below an 18-month high, set on Monday.

That said, the growing acceptance that the US central bank will raise borrowing costs again by the end of this year, along with geopolitical risks stemming from escalating conflicts in the Middle East, acts as a tailwind for the safe-haven buck. Hence, it will be prudent to wait for strong follow-through buying before confirming that the NZD/USD pair has formed a near-term bottom and positioning for any meaningful upside.

NZD/USD 4-hour chart

Technical Analysis

The NZD/USD pair needs to clear the 0.5630-0.5635 horizontal barrier, which nears the 100-period Simple Moving Average (SMA) on the 4-hour chart, to back the case for further gains. The subsequent move up would ease the downside pressure and open the way toward higher levels. On the downside, the 0.5600 round figure, followed by the 0.5580 region, could protect the immediate downside. A break below would be seen as a fresh trigger for bearish traders and set the stage for the resumption of the recent well-established short-term downtrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)