The NZD/USD pair slipped to 0.6130 in Wednesday’s American session, pressured by anticipation of New Zealand’s (NZ) Q1 Gross Domestic Product (GDP) data, scheduled for release on Thursday. Forecasts suggest a stagnant economy, which could amplify expectations of earlier interest rate cuts by the Reserve Bank of New Zealand (RBNZ).
Market Drivers: NZ GDP and Fed Rate Cut Expectations
- NZ Q1 GDP: A weak economic performance could trigger increased speculation of RBNZ rate cuts, as the central bank has maintained a hawkish stance with a 5.5% Official Cash Rate (OCR) for over a year to combat persistent inflation.
- US Dollar (USD) Dynamics: Despite a subdued trading session due to the US Juneteenth holiday, the US Dollar Index (DXY) held firm above the crucial 105.00 support level. Market expectations of two Fed rate cuts this year are adding to the USD’s uncertainty.
- Upcoming US Data: The release of preliminary S&P Global PMIs for June on Thursday will be closely watched for further insights into the US economic outlook.
Technical Analysis: NZD/USD Consolidates Within Broadening Triangle
On the four-hour chart, the NZD/USD pair is trading within a Broadening Triangle pattern. The downside is currently cushioned by horizontal support around 0.6100, while the upside is capped by the upward-sloping border of the pattern near 0.6140.
The 200-period Exponential Moving Average (EMA) at 0.6101 is providing additional support for the Kiwi. However, the 14-period Relative Strength Index (RSI) hovering near 40.00 suggests potential for further bearish momentum if it breaks below this level.
Key Levels to Watch:
- Support: A decisive break below 0.6100 could trigger a move towards the April 4 high of 0.6050 and the psychological 0.6000 level.
- Resistance: A reversal above the June 12 high of 0.6222 could open the door for a rally towards the January highs around 0.6250 and 0.6280.