NZD/USD is facing selling pressure above the key level of 0.6000 as the US Dollar makes a recovery. This pressure is driven by a risk-averse market sentiment and a rebound in the US Dollar’s strength. The S&P 500 opened on a bearish note, indicating a lack of investor appetite for risk. Additionally, 10-year US Treasury yields have increased to 4.49% as Minneapolis Federal Reserve Bank President Neel Kashkari made hawkish comments regarding interest rates, stating that he does not foresee any rate cuts this year. The US Dollar Index (DXY) remains strong near intraday highs around 105.50.
Kashkari emphasized the need to maintain interest rates at current levels for the entire year and expressed the importance of seeing multiple positive inflation readings to ensure that inflation returns to the desired rate of 2%. Meanwhile, investors are anticipating that the Reserve Bank of New Zealand (RBNZ) will cut interest rates starting from the October meeting, a change from previous expectations that rate cuts would not occur until 2025.
Despite this bearish sentiment, NZD/USD has seen gains after breaking out of a Falling Wedge formation on the four-hour chart, indicating a potential bullish reversal. The 20-period Exponential Moving Average (EMA) near 0.6000 continues to provide support for the New Zealand Dollar bull. The 14-period Relative Strength Index (RSI) is currently within the 40.00-60.00 range, with a break above 60.00 likely to trigger a bullish momentum.
In terms of price movements, a break above the April 4 high around 0.6050 could push the pair towards resistance levels at 0.6100 and 0.6160. On the other hand, a downside move would be likely if the asset falls below the April 16 low at 0.5860, potentially leading to a drop towards support levels at 0.5847 and 0.5900. Investors will continue to monitor these levels closely to gauge the future direction of NZD/USD.
