NZD/USD holds ahead of the Fed's decision

• NZD/USD holds nearly flat around 0.5785 after giving back part of its earlier rebound.
• Softer US consumer confidence and slowing private-sector hiring limit demand for the Greenback.
• The Fed’s policy guidance will likely determine whether the pair extends its recovery or resumes its decline.

NZD/USD trades nearly unchanged around the 0.5785 area on Tuesday, struggling to extend its earlier recovery despite a modest decline in the US Dollar (USD). The pair rebounded from recent lows but lost momentum as investors avoided large positions ahead of Wednesday’s Federal Reserve (Fed) monetary-policy announcement.

The Greenback came under pressure after the Conference Board Consumer Confidence Index declined to 90.8 in July from an upwardly revised 92.2 in June. US private employers also added an average of only 15K jobs per week during the four weeks ending July 11, according to the NER Pulse report, indicating that hiring slowed for a fifth consecutive week.

The New Zealand Dollar (NZD) receives some support from the sharp decline in oil prices, as lower energy costs improve the outlook for New Zealand, which relies heavily on imported fuel. However, cautious market sentiment and uncertainty surrounding the Fed’s guidance continue to limit the Kiwi’s recovery.

The Fed is expected to leave interest rates unchanged on Wednesday. Investors will focus on the policy statement and Chair Kevin Warsh’s press conference for signals regarding future adjustments. A hawkish message could strengthen the US Dollar and push NZD/USD back toward its recent lows, while cautious guidance could support another recovery attempt.

Technical Analysis:

On the 4-hour chart, NZD/USD trades at 0.5788. The pair is hovering just above both the 20-period simple moving average (SMA) at 0.5783 and the 100-period SMA at 0.5787, hinting at a fragile attempt to build a base after recent weakness, though the cluster of nearby horizontal levels keeps the near-term bias broadly neutral. The Relative Strength Index (14) at 47.8 sits slightly below the 50 line, suggesting a lack of strong directional momentum as price consolidates around its short- and medium-term averages.

On the topside, initial resistance emerges at 0.5791, followed by another nearby barrier at 0.5799, where recent supply has tended to cap rebounds; a break above these caps would open the way toward 0.5907, then 0.5930 and 0.5965. On the downside, immediate support is reinforced by the 100-period SMA at 0.5787 and the horizontal level at 0.5785, with the 20-period SMA at 0.5783 and the subsequent floor at 0.5779 guarding against a deeper pullback; a sustained move below this latter zone would undermine the nascent base-building tone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)