• NZD/USD bulls rally toward a close above 0.6300.
• Bears are lurking looking for the correction. 

NZD/USD is up 1.6% on the day and has travelled from a low of 0.6182 and reached a high of 0.6307. The bird took off in a technical breakout of last month's highs on the back of a weak US Dollar and the US inflation data. 

The US Consumer Price Index arrived (YoY) in June at 3.0% (vs. the expected 3.1% and the previous 4.0%. The core data was a larger miss of 4.8% vs. 5% expected and the prior 5.3%. For the month, it arrived at 0.2% vs 0.3% expected and the 0.4% prior.

As a consequence, the Greenback's index dropped to as low as 100.51, the lowest in two months. US rate futures still show traders overwhelmingly expect the policy rate to rise a quarter point, to a 5.25%-5.5% range, at the Fed's July 25-26 meeting, but now see about a 25% chance of another rate hike before year's end, down from about 35% before the report, Reuters reported. 

As for the domestic outlook, analysts at ANZ Bank explained, ''we continue to expect that the Reserve Bank of New Zealand will follow suit and recommence hikes by year-end. That is despite our expectation that inflation falls faster than the RBNZ expect in Q2.''

''Similar to Canada’s experience, while base effects and goods disinflation will support falls in headline in the near term, sticky services inflation tied to a resilient labour market will prove harder to stamp out,'' the analysts added.