NZD/USD Price Analysis: Slow amid uncertainty over Fed rate cut timing

• NZD/USD moves sideways as investors look for fresh signals on Fed interest rates.
• Investors expect the Fed to cut interest rates twice this year.
• NZD/USD struggles for direction with focus on US PCE core inflation data.

The pair NZD/USD It is trading in a limited range between 0.6105-0.1030 in the early American session on Monday. The pair consolidates as uncertainty deepens over when the Federal Reserve (Fed) will begin reducing interest rates. Investors expect the Fed to begin cutting rates starting in September with a subsequent move at the November or December meeting.

Contrary to market expectations, Fed officials see only one rate cut this year in the final quarter. Officials want to see inflation decline for months to gain conviction before pivoting toward policy normalization.

The US Dollar Index (DXY) has fallen to 105.50 amid cheerful sentiment in the markets. On Friday, the US Dollar saw strong buying interest as S&P Global’s preliminary report showed overall activity expanded surprisingly, with robust improvement in the manufacturing and services sectors.

This week, investors will focus on the United States (US) core personal consumption expenditure (PCE) price index data for May, which will provide new signals on when and by how much the bank will cut interest rates. central this year.

NZD/USD exhibits an inventory tightening formation on the four-hour time frame, indicating a range-bound auction with lower volume. Generally, the inventory adjustment process results in a decisive break in either direction. The pair is trading below the 50-period EMA near 0.6133, suggesting a sharp contraction in volatility.

The 14-period RSI is oscillating in the range of 40.00-60.00, indicating indecision among investors.

A new decline would appear if the pair decisively breaks below the round support level of 0.6100. This would drag the asset towards the April 4 high around 0.6050 and the psychological support of 0.6000.

Conversely, a reversal move above the June 12 high of 0.6222 will expose the pair to the January 15 high near 0.6250, followed by the January 12 high near 0.6280.

NZD/USD four-hour chart