NZD/USD declines to 0.6150 on Tuesday as the US Dollar finds temporary support. The Kiwi asset faces selling pressure amid expectations that the Reserve Bank of New Zealand (RBNZ) will hold its Official Cash Rate (OCR) steady at 5.50%. RBNZ Governor Adrian Orr recently highlighted economic risks associated with overly aggressive monetary tightening while acknowledging inflation remains a concern.
The US Dollar recovers some early losses as traders turn cautious ahead of Thursday’s release of the US core Personal Consumption Expenditure (PCE) price index for January. This crucial inflation data will shape expectations surrounding potential Federal Reserve (Fed) rate cuts. Fed policymakers have signaled a preference for maintaining current interest rates until further evidence of declining inflation towards their 2% target. Technically, the NZD/USD has broken below a consolidation range of 0.6180-0.6220 on the hourly scale, suggesting that larger investors are selling off positions. The near-term outlook appears bearish, with the pair falling below the 50-period Exponential Moving Average (EMA) at approximately 0.6174.
Further downside pressure is indicated by the 14-period Relative Strength Index (RSI) shift from a bullish range (40.00-80.00) to a bearish one (20.00-60.00), suggesting that traders may see pullbacks as opportunities to establish fresh short positions. A break below the February 20 low near 0.6129 could expose NZD/USD to the 0.6100 round-level support, with further potential downside towards the February 13 low near 0.6050. Conversely, a sustained move above the 0.6200 resistance might trigger a recovery towards the February 22 high of 0.6220, potentially reaching the January 11 high at 0.6260.
