Ella 
During Tuesday’s Asian session, the NZD/USD came under heavy selling pressure, as bears now expect the pair to extend its losses and fall below the 0.5900 level.
New Zealand released relatively weak consumer inflation data. New Zealand’s third quarter CPI (%) rose to 1.8%, which caused the New Zealand dollar to weaken across the board. In addition, New Zealand’s CPI annual rate slowed to 5.6% from 6% in the previous quarter, which was also lower than the expected 5.9%. The data forced investors to reduce bets on a November rate hike by the Reserve Bank of New Zealand (RBNZ) and put pressure on the NZD/USD.
On the other hand, with the Federal Reserve’s (Fed) rate hike path unclear, the Dollar is struggling to gain significant momentum and remains on the defensive. Recent dovish comments from several Fed officials ensure that the Fed will remain on hold for a second consecutive month in November. In fact, Philadelphia Fed President Patrick Harker said on Monday that rate hikes are likely over and that the Fed should keep rates steady barring any turnaround in the data.
Firm expectations for a change in the Federal Reserve’s policy stance and upbeat market sentiment prevented traders from making a fresh round of bullish bets on the safe-haven dollar. However, the latest U.S. consumer inflation data released last week leaves the door open for the Federal Reserve to raise interest rates again before the end of the year. This continues to support higher US bond yields, which is a tailwind for the US Dollar and bearish for the NZD/USD. However, to confirm the bearish outlook, a sustained break above the 0.5900 level and resistance would be required.
Market participants will now turn their attention to U.S. economic events, including monthly retail sales and industrial production.
