- NZD/USD attracts some sellers on Wednesday as the USD strengthens ahead of the PCE data.
- A combination of factors might cap the USD and support the pair amid the RBNZ’s hawkish tilt.
- The technical setup backs the case for the emergence of dip-buyers near the 0.5875 confluence.
The NZD/USD pair comes under some renewed selling pressure on Wednesday and drops to a fresh weekly low, around the 0.5945 region during the early European session.
The US Dollar (USD) regains positive traction ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index later today and Federal Reserve Chair Kevin Warsh’s speech at the annual Jackson Hole Symposium on Friday. This, in turn, drags the NZD/USD pair away from the early June high, touched last Friday.
However, diminishing odds for an immediate Fed rate hike move, along with easing inflation fears amid falling oil prices and positive developments surrounding the Middle East crisis, might cap the safe-haven huck. Apart from this, the Reserve Bank of New Zealand’s (RBNZ) hawkish tilt should help limit losses for the NZD/USD pair.
From a technical perspective, spot prices hold above the 200-period Exponential Moving Average (EMA) on the 4-hour chart and an upward trendline, which now act as underlying demand and keep the near-term bias mildly positive. However, repeated failures to conquer the 0.6000 psychological mark warrant some caution for bullish traders.
Meanwhile, the Relative Strength Index (RSI) around 46 hints at consolidative rather than impulsive momentum. Furthermore, the Moving Average Convergence Divergence (MACD) has slipped marginally below zero, suggesting that upside pressure is soft but still supported by the broader structural floor near the aforementioned confluence around 0.5875.
A convincing break below the said support would be needed to signal a deeper corrective slide. As long as NZD/USD holds above these levels on a closing basis, dips are likely to attract buyers. Bulls, however, might await sustained strength and acceptance above the 0.6000 mark before positioning for an extension of a two-month-old uptrend.
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