NZD/USD under pressure as Fed speakers emphasize the hawkish outlook after hot US CPI.

Bulls of NZD/USD face resistance and are subject to heavy supply.

For a test of critical support, the bears might be encouraged to come in.

NZD/USD traders were swept along by volatility Thursday as markets positioned themselves for macro inflationary flows which flowed through every aspect of the forex space. The commodity complex was bought on the inflation hedge play, which initially supported the Kiwi after the knee-jerk greenback bid. However, it was then met with heavy supply in midday trade.

NZD/USD stands at 0.6685 at the time of writing. It has traded between a low and high of 0.6652 in Wall Street's last hours. After James Bullard, Federal Reserve Chairman, spoke out about the US inflation data and suggested that the central bank might be considering rate increases. He stated that he favors a 50bp increase in March and a 10bps hike by July. Volatility is still the dominant theme. The US yields are rising against higher commodity prices. While rates have been less influential on FX recently, the knee-jerk reaction of higher US bond yields tends be NZD negative, analysts at ANZ Bank explained.

NZD/USD technical Analysis

It was noted in the previous analysis:

The "NZD/USD bulls" are leading a significant correction. It was moving 'in on old lows at 0.67 and towards the neckline M-formation at 0.6733. On Thursday, the price reached the target.

It was between the 50% average reversion and the 61% ratio, as follows:

Daily chart NZD/USD

If the Doji candle is followed by a bearish close Friday, it could be a case for a downside continuation in next week's business.