NZD/USD challenges the 20-day SMA by the end of the week

• The NZD/USD pair reached its highest level since the end of May, above the 20-day SMA at 0.6130.
• ANZ predicts next week’s New Zealand GDP data will be mixed.
• The NZD/USD will close a second consecutive week of gains.

The pair NZD/USD has recently reached its highest level since May, breaking above the 20-day simple moving average (SMA) at 0.6130. Dollar losses for the coming sessions could be capped by hawkish bets for the next Federal Reserve (Fed) meeting in June, as recent events have made investors less likely to expect a cut. rates by the end of the year.

Fed expectations hold steady for next week, but bets on rate cut down the road less

Ahead of the upcoming Federal Reserve (Fed) meeting on June 13-14, CME’s FedWatch tool suggests investors are more likely the Fed will refrain from raising rates and instead hold Stable target rate at 5.00%-5.25%. However, bets on a July hike stand at nearly 85% and the odds of a year-end rate cut have dropped from 50% earlier in the week to almost 15%, due to recent unexpected hikes. from the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC). In this sense, a more hawkish stance from the Fed provides support for the USD.

Elsewhere, following the release of New Zealand’s first quarter gross domestic product (GDP) data, ANZ Bank expects “tepid” growth next week and an improvement in the current account deficit.

NZD/USD levels to watch

Technically, the NZD/USD exchange rate maintains a neutral to bullish outlook in the near term as daily indicators show that the bulls continue to gain momentum. However, the pair needs to consolidate above the 20-day SMA to confirm a recovery. On the weekly chart, the pair is preparing to confirm a second consecutive week of gains.

A consolidation above the 20-day SMA at 0.6130 would suggest a continuation of momentum towards the 200-day SMA at 0.6150 and then towards the 0.6200 area. On the other hand, the 0.6090 area is the immediate support level for the NZD/USD. A break below could pave the way towards the 0.6050 and 0.6030 zones.

NZD/USD daily chart