The New Zealand dollar sank against the greenback because of the expectations on earlier-than-expected policy tightening by the Federal Reserve as a response to rapid inflation and higher treasury yields.

As per the data released on Wednesday, U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints.

Analysts hope that the greenback is likely to continue to strengthen as some investors unwind bearish bets, and re-position in anticipation of sustained inflation as more economies emerge from the coronavirus pandemic.

On the other hand, New Zealand Prime Minister Jacinda Ardern said on Thursday that her government will explore more travel “bubbles” and lead trade delegations later this year to re-connect with a post-pandemic world after more than a year of border closures.

Tough lockdowns and its geographical location has helped New Zealand eliminate the novel coronavirus within its borders, but left the country of 5 million isolated from the rest of the world.

An organisation attacking public faith in New Zealand’s Covid-19 strategy claims it has raised $50,000 towards printing two million virus “fact” flyers to be dropped nationwide – and is considering printing more. The flyers, which Voices For Freedom intends to deliver to every letterbox in the country, outlines multiple conspiracy theories about Covid-19 vaccines and their effects. Their contents have been described as “misleading” and in some cases “palpably false”.

NZD/USD 4 Hour Chart:

Support: 0.7116 (S1), 0.7072 (S2), 0.6993 (S3).

Resistance: 0.7240 (R1), 0.7319 (R2), 0.7363 (R3).

Traders will keep an eye on U.S. weekly jobless claims due later on Today and retail sales numbers on Friday for guidance on whether upward pressure on prices will persist. In the meantime greenback is trading upside with improved market sentiment among traders we expect a bearish trend for NZD/USD.