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NZD/USD recovers from 0.6250 as the US Dollar turns sideways ahead of FOMC minutes.
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The likelihood of an interest rate cut by the Fed in March 2024 has dropped slightly.
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NZD/USD manages to sustain inside the Rising Channel chart pattern.
The NZD/USD pair started to rise again after finding buying support near 0.6250 on Wednesday. Kiwi assets found cushion as the US dollar index (DXY) struggled for direction ahead of the release of December manufacturing PMIs to be reported by the United States Institute of Supply Management (ISM) at 15:00 GMT and the Federal Open Market Committee (FOMC) minutes.
S&P500 futures remained flat in the Asian session, reflecting caution among market participants ahead of key US economic events. USD index consolidates around 102.20 after a sharp recovery as investors reconsider risk sentiment.
Bets supporting an interest rate cut by 25 basis points (bps) in March 2024 by the Federal Reserve (Fed) have declined. The likelihood of a rate cut in March fell to 67% from 72% on Tuesday, according to the CME FedWatch tool.
NZD/USD trades in a rising channel chart pattern on the four-hour scale where each pullback is viewed as a selling opportunity by market participants. The Kiwi asset has broken below the 50-period exponential moving average (EMA), indicating that near-term upside bias has subsided for the time being. The broad appeal will remain bullish until the asset persists in an upward sloping channel.
The Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00. Fresh recovery would appear when the momentum oscillator will deliver a range shift move.
Investors should capitalize a mean-reversion move to near the lower portion of the aforementioned chart pattern, which is around 0.6235. This would result in a recovery move towards 13 December 2023 high at 0.6287, followed by January 2 high at 0.6335.
In an alternate scenario, a breakdown below December 18 low near 0.6200 would expose the asset to 12 December 2023 high at 0.6170 and 8 December 2023 low near 0.6100.
NZD/USD four-hour chart
NZD/USD
