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NZD/USD Price Analysis: Defends crucial 0.5860 support

  • NZD/USD rebounds from 0.5860 as US Dollar retreats.
  • Investors believe that the RBNZ will begin reducing interest rates from November.
  • The NZD is trading within the descending triangle pattern, suggesting indecision among investors.

The NZD/USD pair turns sideways slightly below 0.5900 in the European session on Friday, after recovering strongly from the crucial support of 0.5860.

NZD/USD rebounds as the appeal of risk currencies strengthens after economists warned of persistent global inflation. This has increased speculation that central banks other than the Federal Reserve (Fed) will also delay their rate cut plans to prevent inflation from picking up again. Initially, the Fed was only expected to begin cutting interest rates later this year due to persistent upward price pressure and robust labor demand.

Investors see the Reserve Bank of New Zealand (RBNZ) pivoting towards rate cuts from November, after first quarter inflation data in NZ rose in line with estimates. Price pressures rose an estimated 0.6%, up from the previous reading of 0.5%.

The US Dollar Index (DXY) falls slightly to 106.10. The near-term outlook remains strong, as the Federal Reserve (Fed) believes that interest rates will remain rising long enough for inflation to sustainably return to the required rate of 2%. Currently, traders see the Fed starting to cut interest rates starting at the September meeting.

The NZD/USD pair oscillates in a descending triangle chart pattern, showing a sharp contraction in volatility. The descending edge of the mentioned chart pattern is drawn from the April 12 high near 0.6000, while horizontal support lies from the April 16 low at 0.5860.

NZD/USD is attempting to break above the 20-period EMA, which is trading around 0.5900.

The 14-period RSI recovers strongly above 40.00. However, the bearish bias remains favorable until the RSI breaks above 60.00.

Further declines would occur if NZD/USD breaks below the April 16 low at 0.5860. This would drag the asset towards the September 8, 2023 low at 0.5847, followed by the round support level of 0.5900.

On the other hand, a recovery move above the March 18 high at 0.6100 will take the pair towards the March 12 low at 0.6135. Breaking this last level will push the asset towards the February 9 high around 0.6160.

NZD/USD hourly chart

NZD/USD

Overview
Latest price today 0.5899
Today Daily Change -0.0003
Today's daily variation -0.05
Today's daily opening 0.5902
Trends
daily SMA20 0.5978
50 daily SMA 0.6067
SMA100 daily 0.6127
SMA200 Journal 0.6057
Levels
Previous daily high 0.5943
Previous daily low 0.5872
Previous weekly high 0.6079
Previous weekly low 0.5933
Previous Monthly High 0.6218
Previous monthly low 0.5956
Daily Fibonacci 38.2 0.5899
Fibonacci 61.8% daily 0.5916
Daily Pivot Point S1 0.5869
Daily Pivot Point S2 0.5835
Daily Pivot Point S3 0.5798
Daily Pivot Point R1 0.594
Daily Pivot Point R2 0.5977
Daily Pivot Point R3 0.6011

Source: Fx Street

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