NZD/USD struggles to break 0.5900 with US CPI just around the corner

• The NZD/USD pair is stuck near 0.5900, unable to develop significant momentum.
  The dollar is in the spotlight as investors look ahead to Wednesday’s US inflation numbers.
• The Federal Reserve appears willing to step back from the rate hike cycle as long as inflation continues to decline.

The NZD/USD pair is struggling to find firmer footing after falling to the 0.5900 level during the session on Tuesday, falling from the day’s high of 0.5923, while the US Dollar (USD) takes a step forward against the iwi (NZD).

In this week’s economic calendar, the NZD will have little impact. The Food Price Index and Purchasing Managers’ Index (PMI) numbers are not expected to attract much reaction from the markets, and momentum will depend on the Dollar (USD) side.

Inflation figures in the US will be key in the middle of the week, the CPI will set the tone

Investors are awaiting US Consumer Price Index (CPI) numbers due out on Wednesday. Market participants generally believe that the Federal Reserve (Fed) will pause at its next meeting in September when it comes to further rate hikes; However, expectations could change if the CPI surprises to the upside. Investors expect the August CPI to show an annualized price rise of 0.5%, mainly in the cost of energy and fuel, and for the underlying CPI to remain stable at 0.2%.

Over the weekend, US Treasury Secretary Janet Yellen stated her optimism that the US could successfully control inflation without harming the jobs market. Yellen also noted that overall inflation indicators have been declining recently, and there has yet to be any sign of a wave of layoffs.

NZD/USD Technical Outlook

The kiwi is mostly flat at opening prices for the week near 0.5900, but the NZD/USD pair is notably downside from recent action, having closed in the red for seven of the last eight consecutive weeks of trading. Kiwi bulls are struggling to lift the pair off one-year lows near 0.5860, and sustained selling pressure will see NZD fall back to 2022 lows near the 0.5600 area.

Hourly candlesticks show the pair attempting a recovery from the day’s lows near 0.5890, but 0.5900 appears to be an important level to overcome, with 0.5980 waiting higher and acting as a ceiling for short-term momentum.

The 4-hour candle shows the NZD/USD pair on the lower side, struggling to hold on to short-term consolidation levels. Despite the bearish stance, higher lows are set for September, and Kiwi bidders will try to build up enough momentum to hold on to the 0.6000 area.

NZD/USD 4-hour chart