NZD/USD Price Analysis: Stays on sidelines near 0.6100 ahead of RBNZ policy decision

• NZD/USD remains sideways with eyes on the RBNZ policy decision.
• The RBNZ is expected to keep interest rates steady.
• Fed officials are not confident in the progress of the disinflation process.

The NZD/USD pair consolidates in a tight range of 0.6100-0.6140 from the past three trading sessions. The Kiwi asset is expected to find direction after the announcement of the interest rate decision by the Reserve Bank of New Zealand (RBNZ), which is scheduled for Wednesday.

The RBNZ is widely expected to keep its Official Cash Rate (OCR) steady at 5.5%. Therefore, investors will focus on the interest rate guidance. Considering high inflation in the New Zealand region, the RBNZ is expected to hold interest rates steadily for a longer period. Currently, financial markets expect that the RBNZ will move to policy normalization in 2025.

Meanwhile, the US Dollar holds the crucial support of 104.50 as Federal Reserve (Fed) policymakers support for keeping interest rates at their current levels for a longer period. In the early American session, Atlanta Fed Bank President Raphael Bostic commented that he is not in a hurry for rate cuts and wants to be sure that inflation will not bounce again before considering rate cuts. When asked about the timing for rate cuts, Bostic said he doesn't see them before the fourth quarter of this year.

NZD/USD extends recovery to 50% Fibonacci retracement (plotted from December 26 high at 0.6410 to April 19 low around 0.5850) at 0.6130 on a daily timeframe. The near-term outlook of the Kiwi asset has improved as the 20- and 50-day Exponential Moving Averages (EMAs) around 0.6017. The 14-period Relative Strength Index (RSI) has shifted comfortably into the bullish range of 60.00-80.00, suggesting that the momentum has leaned toward the upside.

An upside move above February 9 high of 0.6160 will drive the asset towards 61.8% Fibo retracement at 0.6200, followed by January 15 high near 0.6250

On the contrary, fresh downside would appear if the asset breaks below April 4 high around 0.6050 This would drag the asset towards the psychological support of 0.6000 and April 25 high at 0.5969.

NZD/USD daily chart