The NZD/USD pair sees a strong rebound to 0.6100 following a decline in US core PCE inflation data for May. The annual US core PCE decreased to 2.6% from 2.8% in April, leading to increased expectations of rate cuts by the Federal Reserve. The US Dollar Index drops to near 105.80 as a result of the softer US inflation figures, boosting the prospects of a potential rate cut by the Fed.
Looking ahead, the New Zealand Dollar will be influenced by the Caixin Manufacturing PMI data for June, which is set to be released on Monday. With New Zealand being a major trading partner of China, any slowdown in Chinese growth can weigh on the NZD. The NZD/USD pair recently broke down from a Double Top chart pattern on a four-hour timeframe, triggering a bearish reversal after falling below the swing low near 0.6100.
The 200-period Exponential Moving Average near 0.6106 continues to act as a strong resistance level for the New Zealand Dollar bulls. The 14-period Relative Strength Index (RSI) has rebounded into the 40.00-60.00 range, indicating that downside momentum has weakened. A pullback towards 0.6100 could present a selling opportunity, with targets set at around 0.6050 and 0.6000. On the flip side, a reversal move above the June 12 high of 0.6222 could push the pair towards the January 15 high near 0.6250 and the January 12 high near 0.6280.
The Core Personal Consumption Expenditures (PCE) Price Index released by the US Bureau of Economic Analysis on a monthly basis measures changes in the prices of goods and services purchased by consumers in the US. The YoY reading compares prices in the reference month to the same month a year earlier. The core reading excludes volatile food and energy components to provide a more accurate measure of price pressures. A high reading is typically bullish for the US Dollar, while a low reading is bearish.
